Homepage / Investment / Bill Miller's next big value bet is on the shopping mall
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election

Investment

Bill Miller's next big value bet is on the shopping mall

Bill Miller’s Income Strategy investment fund has dumped its stake in a high-flying jail operator and placed a bet on malls, despite the threat e-commerce giant Amazon.com poses on the retail industry.

“We think the narrative reflected in current prices has outpaced reality,” one of the fund’s portfolio managers, Bill Miller IV, said in a second quarter investment strategy update posted July 20. Miller manages the $116 million fund with his father, who rose to prominence through Legg Mason Capital Management before founding Miller Value Partners.

In the second quarter, it bought two real estate investment trusts for shopping malls, Washington Prime and CBL & Associates, according to the blog post. Both primarily operate in mid-size or smaller U.S. cities such as Peoria, Illinois, and Winston-Salem, N.C.

The stocks have fallen sharply over the last 12 months, down 33 percent and 27 percent, respectively. In that time, struggling retail brands have taken the SPDR S&P Retail ETF (XRT) down 8.5 percent, while Amazon shares have climbed nearly 28 percent.

“The ongoing narrative is that Amazon is fundamentally changing the retail business as we know it and killing many traditional retailers in the process, which is true,” Miller said.

But he pointed out the real estate stocks trade near a low-teens dividend yield and said the “dividends are likely safe for the foreseeable future” due to free cash flow.

“Seasoned management teams run these companies, and this is not the first time consumer preferences have changed,” he said. “The firms are using the excess cash flow above and beyond the dividends to redevelop their properties, and such investments thus far appear to generate compelling incremental rates of return.”

Washington Prime’s top tenants include L Brands and Foot Locker while CBL is trying to move from customers like Macy’s and Aeropostale to Dick’s Sporting Goods and Cheesecake Factory, according to investor presentations.

Miller said the fund bought the real estate stocks with the proceeds from the closing out of its position in private prison operator Geo Group, which he called the “most significant change” for that quarter.

Income Strategy invested in the stock shortly after it plunged nearly 40 percent in August 2016 on news the Department of Justice, under the Obama administration, would phase out the use of private contractors by federal corrections facilities. Miller said it seemed at the time the stock’s drop was likely “too far in relation to what was practical.”

The stock rebounded after Republican President Donald Trump won the election, and hit an all-time high in April. At those prices, Miller said they did not think Geo “would allow us to generate a risk-adjusted return substantially above our benchmark” and sold out.

Shares traded Wednesday nearly 22 percent below that record. The stock dropped more than 4 percent this week after quarterly revenue and sales forecasts disappointed.

Miller’s investments in shopping malls come as Warren Buffett has made similar investments.

In late June, news broke that Buffett’s Berkshire Hathaway took a 9.8 percent stake in real estate investment trust Store Capital, whose top 10 customers include AMC Entertainment, Applebee’s, Popeyes Louisiana Kitchen and Ashley Furniture, according to an investor presentation.

According to S&P Global Market Intelligence data from March, Buffett has a personal 5.89 percent stake in Seritage Growth Properties, the REIT Sears formed in 2015 as a way to generate cash from the struggling retailer’s properties.

Miller Value Partners said its Income Strategy returned a gross 24.39 percent in the 12 months ended June 30, and gained 3.64 percent in the second quarter, outperforming its benchmark Bank of America Merrill Lynch High Yield Master II Index for a fourth straight quarter.

In contrast, the S&P 500 posted a gain of 3.09 percent in the second quarter and 17.9 percent in the 12 months through June 30.

“The majority of the Strategy remains in equities, which look to be a far better value proposition for the long-term investor,” Miller said in the blog post.

Top contributors to second quarter returns for Income Strategy were positions in Valeant Pharmaceuticals and private equity firms Carlyle and Apollo Global Management. The largest detractors from quarterly gains, Miller said, were investments in Frontier Communications and Medley Capital.

— CNBC’s Lauren Thomas contributed to this report.

Source: Investment Cnbc
Bill Miller's next big value bet is on the shopping mall

Comments are closed.