The transcript from this week’s, MiB: Bill Miller IV, CIO, PM, Miller Value Fund, is below.
You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.
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Masters in Business with Barry Ritholtz
Episode: Conviction Investing — Bill Miller IV | March 20, 2026
[00:00:00] Barry Ritholtz: This week on the podcast, I have yet another extra special guest, Miller Value Fund’s Bill Miller IV. He is the son of Bill Miller III. Fascinating investor, portfolio manager, and World Series of Poker player. They have a very unique approach to value. It’s not your traditional, just buy ’em cheap. I thought this conversation was fascinating and I think you will also. With no further ado, my conversation with Miller Value Fund’s Bill Miller.
[00:00:34] Bill Miller IV: Thanks for having me. It’s great to be here.
[00:00:37] Barry Ritholtz: So I want to talk about your investment philosophy, what you’re doing at Miller Value today, but let’s roll back a little bit beforehand. You get a degree in economics from Tufts and then an MBA from Dartmouth Tuck School of Business. Was investing the original career plan?
[00:00:55] Bill Miller IV: No, it wasn’t the original career plan. You know, when I was growing up, went to a small private boys school in Baltimore, Maryland. Never really knew what I wanted to be when I grew up, but when I pointed that out to my parents, they said, well, just consider school as your job. And the harder you study, the more options you’ll have down the line, and it’ll help you figure it out.
[00:01:20] Barry Ritholtz: So that sounds like pretty good advice.
[00:01:23] Bill Miller IV: I followed it. I did well academically in school. So when I went to Tufts, I think the primary concern was somewhere where I could actually play baseball. So growing up was a huge Orioles fan. That was something that my dad and I often did together. He was my coach in Little League, something I’m doing now today for my son. Sports teach you a lot about being on a team, about how to operate, how to internalize what you can control and not focus on the rest.
[00:01:53] Barry Ritholtz: Did you play baseball in college?
[00:01:55] Bill Miller IV: Yeah, but I wasn’t very good. So I learned that pretty quickly. I played for two years. The difference between the guys who are good and really good is so tiny, just a little wood on the bat once or twice more a week, and you’re in a different tier.
[00:02:12] Barry Ritholtz: Exactly right. It’s fascinating.
[00:02:14] Bill Miller IV: Yeah. And you know, I probably deluded myself for a while about how good I could be, but I also probably didn’t focus on the right things. And knowing what I know now about how to get better and improve at things, I could have been much more systematic about it than I was.
[00:02:32] Barry Ritholtz: So you start your career at McKinsey. Why consulting? What led to that?
[00:02:37] Bill Miller IV: Yeah. Well, so I interned for my dad’s group in college. Loved it. Learned a lot. But then, you know, on campus recruiting came along and McKinsey was one of the names and I just applied to it, did a little work on it, and made it through that interview process, which was pretty rigorous. And I got an offer from McKinsey and I said, hey Dad, I love being with your group, investing’s a lot of fun. You know, what would you do if you were me? And he said, well, you can always tell McKinsey, you can always come back and work for me, but if you tell McKinsey no, you’ll never have a chance to work there again.
[00:03:17] Barry Ritholtz: Right.
[00:03:17] Bill Miller IV: So it was this concept of optionality again. And also there was, he knew, and I didn’t know at the time, but they placed an immense amount of focus on professional development. And so that was a really valuable place to spend the first three years of my career. So I was working on a huge variety of consulting projects. Mainly actually the job I had there, now I don’t know if it exists because of AI. So what I was doing was remotely supporting teams on research efforts and deep dives on stuff, which now you just ask ChatGPT about it. And it probably does a better job summarizing everything I could possibly do in two minutes, assuming it’s accurate, which is always a little bit of an if.
[00:04:03] Barry Ritholtz: That is a big if for sure. Focusing on primary sources is still a critical skill that I think a lot of people underemphasize. What did you take from your years consulting that showed up as helpful as an investor?
[00:04:17] Bill Miller IV: You know, one of the things, this might surprise you, less so about the data-driven nature, ’cause my dad’s a data-driven thinker and thinking quantitatively has always been in my wheelhouse. But the thing that I learned at McKinsey more than anywhere else would be to focus on client service. And how to interact with people, how to do the subtle things that show somebody else is the client. In finance, you know, when you’re managing money, it’s very hard to differentiate yourself. And Ken French, who was a professor of mine at Tuck, famous Fama-French factor model. One of the things he imparted on us was how long does it take to know if a money manager is actually any good?
[00:05:02] Barry Ritholtz: And the answer is?
[00:05:03] Bill Miller IV: From a statistically significant basis, longer than any money manager’s career.
[00:05:08] Barry Ritholtz: I was gonna say 10 years, 20 years.
[00:05:11] Bill Miller IV: It’s 20-plus for it to be statistically significant. So you have to be doing other things. Content’s a big focus, right? That’s a way to differentiate yourself. The way you communicate with clients, getting back to them quickly. All of these things are really important, and I learned those at McKinsey and I’m not sure I would’ve learned those to the same extent if I had just directly joined my dad’s firm.
[00:05:38] Barry Ritholtz: No, it’s really interesting. So McKinsey was a solid place to get grounded. What led to the pivot to investing, late ’07, ’08?
[00:05:46] Bill Miller IV: Yeah. So at McKinsey, we were effectively handing over analyses to clients and then leaving and moving on to the next analysis. And it occurred to me that if you actually wanted to build any equity in your analysis, in what you were doing, you had to actually take a real stake in something. And so that made me think, okay, this would be a great time to pivot from what I was doing at McKinsey to my dad’s side of things where that’s exactly what you’re doing all day, every day. And then I also, during college, I took a liking to poker and played a lot of no-limit hold ’em. And back then PokerStars was kind of an illegal gray area. And so I played a lot online and I saw a lot of similarities between what my dad did, poker, analytical edge in terms of thinking quantitatively at McKinsey. And it all kind of came around to moving in that direction.
[00:06:42] Barry Ritholtz: So speaking of your father, how did growing up in the Bill Miller household influence how you look at risk and reward, at investing? How big of an influence was he on your initial philosophy?
[00:06:55] Bill Miller IV: I think he’s most of it. It is hard for me to specifically say A, B, and C because it was as much learning from watching him and how he operated. So number one, he was always, always had a stack of research and was always going through content, always looking for new perspectives. He’s a relentless truth seeker. And I think that’s ultimately what we’re doing as investors is trying to separate where the truth is from where the perception is around what’s gonna happen. And the bigger the gap, the more you wanna place a bet.
[00:07:30] Barry Ritholtz: That variant perception is really important.
[00:07:33] Bill Miller IV: Exactly. Especially when that gap gets bigger and bigger. And especially if there’s a margin of safety there to protect you on the downside. So relentless truth-seeking. And the other thing is, you know, there were no shortcuts for him. There’s no substitute for actually putting in the time, going through that content all the time and being in front of your machine all day. And if time is the ultimate resource and constraint for everyone, thinking in blocks of time and thinking how to maximize your productivity per unit of time, I think is something that I took away from him.
[00:08:11] Barry Ritholtz: Really interesting. So going back to the family business, that’s a pretty loaded concept for a lot of people. What was it like first going back to work with your father and then becoming the controlling owner of Miller Value Partners?
[00:08:26] Bill Miller IV: It was fantastic ’cause we were a small group at Legg Mason for a good period of time, probably from 2013 or 2014 until we split off and went independent in, I think it was 2019 or so. So got to work with my dad very closely, a lot. But at the same time, one of the things I love about it is the market doesn’t really care what he did or didn’t do. And ultimately now that I’m in charge of the portfolios, it’ll hinge upon my decision making more so than what he did. And so it’s on me to now take everything I’ve learned and run with it and do what we can do.
[00:09:03] Barry Ritholtz: Was your father a poker player? How did you find your way into that?
[00:09:08] Bill Miller IV: No, he wasn’t a poker player. It was when Chris Moneymaker won the World Series. I don’t know if you remember. I think it was maybe ’02 or ’03, the big funny glasses. And he was an accountant actually. And so, you know, he stressed a lot of the quantitative decision making. And the other thing I actually looked at coming out of Tuck was baseball operations stuff, because Moneyball was coming around then and the whole analytical side was just emerging. And you know, I know you like to talk about mistakes, but I think of specifically that recruiting process, my attitude towards it and just some mistakes I made there.
[00:09:49] Barry Ritholtz: Well, we seem to learn more from our failures than we do from our successes. ‘Cause we don’t know if our successes were the result of good fortune or skill. If it takes 20 years to figure out which it is, you’re gonna obviously learn more from the errors. Hey, we know this was a bad choice.
[00:10:08] Bill Miller IV: That’s right. Or was it a good choice with a bad outcome? Well, I think in this case, the outcome was good because it was ultimately where I was probably looking to wind up. But at that time I was thinking, I wanna do baseball, baseball, baseball. I mentioned earlier I wasn’t good enough to play. I wanted to sort of use my analytical talents to go into the analytical side. And as I went through the recruiting process, it became very clear that I was jumping through hoops, waiting for callbacks. And it was a very intense process. And I realized that I was probably gonna be charting pitches in Topeka.
[00:10:48] Barry Ritholtz: At the end of it. Which to me didn’t seem all that exciting. But in retrospect, if you wanna be in baseball operations, you should do anything you possibly can to get your foot in the door to these competitive businesses. Let me point out, a little over a decade ago, a kid became an intern in the NFL and he just won the Super Bowl as head coach.
[00:11:11] Bill Miller IV: So if you really love it that much and you’re that committed. I’m with you. I can’t count pitches in Topeka. I just couldn’t imagine that. I mean, yeah, especially because you have how many other people were interns and they didn’t head coach the Super Bowl winner. But it’s funny ’cause now I see that on the other side, right? So I get LinkedIns and messages all the time. Hey, I’m a really good software analyst. I want to come and work for you and be a software analyst. And I’m like, we don’t need a software analyst right now. We need somebody that can go get me a sandwich at lunchtime. But I understand the perspective too. It’s just that I think if you want to become a member of a team, you have to understand what the team needs and where you can genuinely help. And it may not always necessarily align with what you want to do. And I think that’s important to keep in mind.
[00:12:09] Barry Ritholtz: Really very interesting. So as long as we’re talking about all these career choices, if you were starting out today, would you follow a similar path to what you did previously or would you go a different route?
[00:12:23] Bill Miller IV: I really like what I’m doing now and I wanna do it indefinitely. So it’s hard for me to go back and say I would do something differently because I’m where I want to be. And for the long term, I do think one of the lesser considered paths that a lot of undergrads don’t think about would be actually going into something entrepreneurial. And I don’t mean like starting a startup that you’re trying to scale from zero to a gajillion dollars over the next year. But that’s what people tend to think of ’cause that’s where all the returns look like they are. In reality, I think potentially scaling a small services business, you know, whether that’s power washing, home cleaning, just things where you can get your arm around the fundamental service and scale that and make it bigger is potentially a more, a safer risk-adjusted way to a big outcome than people consider.
[00:13:21] Barry Ritholtz: Yeah, just because you’re learning a business from the ground up, customer relations and all those other things.
[00:13:28] Bill Miller IV: Well, you know, even in our business, it takes time to build a track record. It takes time to build the assets. And so anything you do where you’re gonna have a good outcome in the long run just takes repetitive effort and the right focus. And so sometimes the learning around something that you can get your arms around can be easier than the learning around software development or scaling a big fund or things like that.
[00:13:56] Barry Ritholtz: Really interesting. Coming up, we continue our conversation with Bill Miller IV, Miller Value Fund’s Chief Investment Officer, talking about his investment philosophy. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.
[00:14:12] Barry Ritholtz: I am Barry Ritholtz. You are listening to Masters in Business on Bloomberg Radio. My extra special guest today is Bill Miller IV. He is the Chief Investment Officer and portfolio manager of Miller Value Fund, where he works with his famous father, Bill Miller III. So let’s talk about your investment philosophy separate from your dad’s. Starting with, how do you define value in a world where a lot of the traditional metrics like price-to-earnings or price-to-book seem to have been downgraded somewhat? Perhaps they don’t fully capture modern intellectual property-based business models. How do you think about those?
[00:14:53] Bill Miller IV: Yeah, I think you have to have a flexible definition of value. And if it’s just based on accounting figures, you’re probably not gonna do very well over the long run. Because if you look at some of the best performing stocks of all time, they never look cheap. Just because they have such a right tail and they compound. They’re investing all their earnings and they’re constantly seeking to grow that edge. And so solely focusing on accounting factors is not a great way to capture long-term value or outperformers. Although it can be. We have a strategy whereby my business partner Dan Lysik has this collection of 10 or 12 names that look insanely cheap on these metrics. So there’s a lot of different ways to skin the cat.
[00:15:41] Barry Ritholtz: So what are the different thought processes around defining value? Cheap but not broken is obviously what your partner is focusing on. How do you contextualize things like Amazon or Nvidia or Google, which have looked expensive for 10 years and have just shot the lights out?
[00:15:59] Bill Miller IV: Well, in the case of Amazon, they started with a very small idea around just selling books online. And it ended up being this retail juggernaut just because if you look at now the distribution logistics networks that they’ve used to fulfill their orders, it’s a network that can’t be touched. It’s the everything store. And it depends on the actual scenario. So one of the things that I’ve been vocal about now for probably 10 years is our view that Bitcoin is still a massively undervalued technology. And so that would be one where you’d probably say, well, why? It has no cash flows, it’s speculative, it’s based upon other people’s beliefs. And I’d say that’s exactly right. It is based upon other people’s beliefs, but other people haven’t yet come around to the view that it is a functionally superior technology to gold. It’s a form of capital governance. I think it requires a lot of different lenses. When we say we have a flexible definition of value, you have to approach things from a variety of different perspectives. In this case, one of the reasons I think Bitcoin is so interesting and compelling, 17 years in, you know, it’s gone from this weird technology on the internet that only criminals used, to now it’s collateral for loans in our modern day financial system.
[00:17:24] Barry Ritholtz: And so what explains that?
[00:17:26] Bill Miller IV: Well, markets explain it to an extent, and people are increasingly coming around to view it as an interesting place to put money and an interesting capital governance system. It’s totally separate from the fiat systems that everyone has known for their entire lifetimes and multiple centuries before us. It wasn’t possible prior to 2009 or 2010 when the white paper came out. And so now you’ve got this new emerging system of capital governance that I think is one of the most dynamic areas of finance in general. It’s an area I’m very optimistic about over the long term. It’ll bounce around. It’ll be volatile, but I think it’s headed to much bigger places.
[00:18:09] Barry Ritholtz: So we are recording this the day after it briefly broke 60,000. Are you a buyer of Bitcoin at these prices?
[00:18:16] Bill Miller IV: Yes. So that’s a big part of my personal financial situation. In one of our funds, digital assets collectively are about 10% of that fund.
[00:18:25] Barry Ritholtz: So let’s stay with the concept of philosophically, this is an interesting technology. I’ve described this as stop thinking of it as a unique asset class. I think of it as somewhere between Facebook and Google, between Meta and Alphabet, as a technology company. Which gives it a little more perspective. But at the same time, it came out around the same time as an iPhone, and I would never give up my iPhone. I don’t know how I would do my train tickets, my plane tickets, my communication, my portfolio, everything I do, I do on this. If Bitcoin were to disappear tomorrow, it wouldn’t affect my life in the least. Why is it that 17 years in, we’re still waiting for this to gain broad usefulness?
[00:19:11] Bill Miller IV: Well, so if you look at the introduction of running water in households, it took a hundred years for it to go from possibility to ubiquitous. And that was a clearly better technology than using an outhouse or boiling water. So this is an entirely new idea. And again, from my perspective, it’s a capital denominator. It’s not a numerator, it’s a capital denominator. So Bitcoin is a denominator for capital. And the reason I think it’s so superior to what we’ve known before is that money, the way it works right now, it’s ultimately backed by the threat of state-ordered violence. Standing army and a set of laws. You know, you don’t pay your taxes, we’ll throw you in a box and lock the key away.
[00:19:57] Barry Ritholtz: Throw the key away.
[00:19:59] Bill Miller IV: But if you think about actually around the world, the countries you want to visit, most of them are going to have stability of process and rule of law. And the places where that’s not the case, there’s a much less distinction between who controls the ledger and who controls the guns. So the farther apart those two things are, the better. So in this case, we now have a distinct ledger entirely apart from any state, and its units can’t be controlled by anyone. And they’re controlled by actual energy. So you need to have energy to crank out a new Bitcoin because that’s what the whole mining process is about. You verify a transaction, takes a lot of energy to do that, and in exchange for expending that energy, you get more Bitcoin. That’s the miner reward. So this is a capital denominator whereby energy input is actually required to create new units. What happens now is somebody, a bunch of Congress people sign something, Fed goes and prints money to keep roughly rates roughly in line, prices roughly stable, employment roughly full. And so there’s still some issues with that from a process perspective. They’re trying to control the money supply to engineer outcomes as opposed to having a fair set of value that we all agree upon.
[00:21:21] Barry Ritholtz: Well, you know, I don’t care about deficits. The past 50 years I’ve been hearing about the problem with printing money and everything that we were warned against didn’t happen. The dollar hasn’t devalued. We haven’t had hyperinflation. We haven’t crowded out private capital. And you could still lend money to Uncle Sam at historically low rates. So all the warnings about printing money and deficits have been the boy who cried wolf for half a century. And then there’s the idea that we limit it to 21 million coins. And that scarcity creates value. I understand it’s virtual. I understand the advantages of having things be purely digital from conception forward. I have a hard time getting past the criminality and the pig butchering and the blackmail. That’s a little problematic. And it’s sort of like democracy. It’s the worst system except all the others. Well, a central bank and a government that makes sure we’re doing something within reason is better than just opening it up to the Wild West, which is what this seems to have been for a long time. The US was pretty aggressive in embracing it, especially this administration. And it seems to have speculatively run up in anticipation of that. And once it was all in the price, we got cut in half. It’s hard when you’re talking about stability. The US dollar was down 9% in 2025, not cut in half. This is a giant whack in less than six months. So I have a hard time just wrapping my head around the source of stability being something with no fundamental value but swinging wildly up and down. So I’m not as negative about it as a lot of people are. I was really negative about the NFTs. You want to take something with literally no value and totally reproducible? I understood the idea of a unique identifier on the blockchain for a $10,000 Birkin bag. That made some sense, but not $68 million. There seems to be a lot of speculative excess that gets in the way of the technological story underneath.
[00:23:30] Bill Miller IV: Yeah, and I think you bring up a good point with regard to the United States and the deficits not making a big impact. And that’s because we are the best house in a bad neighborhood from a fiat perspective. I mean, the reason that America is the most desired place to be from an immigration perspective, I think we have four times multiples the number of immigrants as the next four closest countries combined. Again, that comes down to stability of process, rule of law, and property rights. And so if there’s now a form of currency that wasn’t possible 15, 20 years ago that has more stability of process and more certainty around property rights over the long term, I think it’s an education issue as much as anything else. People may not come around to that view, but from my perspective, the quantitative inevitability of the technology is pretty compelling when you look at just Bitcoin versus gold. Gold’s done amazing in the past year. I get it. It’s a deep part of the debasement trade. Bitcoin hasn’t, but when you think about gold as the predominant check and balance on fiat’s lack of accountability, and then you look at the functional attributes of Bitcoin, it’s so far superior to gold, yet it trades at a fraction.
[00:24:51] Barry Ritholtz: Limiting the economy to how much yellow metal we scrape out of the ground each year never made any sense. But then it’s a little bit of a leap to, alright, now we’re gonna replace metal dragged out of the ground, which happened to be formed in the collision of neutron stars a couple billion years ago, with a digital platform. I understand why people are skeptical. I just look at it as a big company. And if you want to bet on one of the big mega caps, well maybe there’s 10, 12, 15 of them. This is another one.
[00:25:25] Bill Miller IV: Yeah. But from my value-oriented perspective, that comparison to gold, functional equivalence, if not functional superiority, for Bitcoin — if you map the market cap of gold right now to Bitcoin, Bitcoin would trade at $1.7 million a coin. If everyone felt that way, they don’t, obviously, but I think over a long period of time they’ll get there.
[00:25:48] Barry Ritholtz: Huh. Really interesting. $1.7 million. By the way, I wanna move the Bitcoin discussion to the end of this segment and I wanna slot in some conversation about Legg Mason and his investment philosophy. So you joined Legg Mason in ’08, pretty much right in the middle of the financial crisis. How did that experience shape your perspective on investing and in particular on value?
[00:26:13] Bill Miller IV: Wow, start with the hard-hitting question here. So that was, as you point out, I joined right at the top. I think when I joined Capital Management, there were roughly 150 people working there. And then by the time Capital Management merged with ClearBridge, there was a substantially fewer number of people working there just because assets flew out the door, performance struggled, and that can be a pretty ugly compounding effect on an asset manager.
[00:26:43] Barry Ritholtz: For sure. By the way, that story was pretty much ubiquitous throughout finance.
[00:26:48] Bill Miller IV: Yeah. And so I think that taught me, you know, to run one of these businesses, you obviously want to have some extra gas in the tank at all times. You don’t wanna run it too thin from an operating capital perspective if you wanna build it for the long term. And so it’s a good idea to keep those fixed costs lower than you might even anticipate.
[00:27:11] Barry Ritholtz: So let’s talk about building on that. You come out of the financial crisis, you get your CFA soon after, 2011, something like that?
[00:27:20] Bill Miller IV: That sounds right.
[00:27:21] Barry Ritholtz: And then become a Chartered Market Technician in 2018. Unusual combination. Tell us why you went that route.
[00:27:28] Bill Miller IV: Yeah, so the analogy I make is if the CFA teaches you to play your cards on the poker table, CMT teaches you to play the other players at the poker table. And one of the interesting things about the CMT is number one, it takes a lot less time than the CFA, but number two, I use that, some of the teachings from that, more often now than I use the CFA.
[00:27:51] Barry Ritholtz: It’s funny, the way you described it. I always thought the difference was financial analysts tell you what to buy, technicians tell you when to buy.
[00:28:01] Bill Miller IV: Well, I think that’s accurate as well. And so one of the things that it’s very easy to do as a value investor is see multiples coming down and a stock going down. You go, wow, this is way too cheap. And the reality is that it could just keep going down because it’s going down and people are selling it. And you have to be able to read that on the chart and when the volumes change and when the investor behavior changes. So it teaches you to look at investor behavior. It teaches you how to figure out what other investors are thinking based upon price, trends, action, and volume. And it’s been a really valuable skill set and complement to the CFA.
[00:28:44] Barry Ritholtz: So walk us through your process from idea generation to execution and position sizing. What sort of steps do you have to work your way through?
[00:28:53] Bill Miller IV: Well, I think a lot of it starts with the appreciation that most assets are efficiently priced. So we have a portfolio of things that we believe are undervalued. And all day, every day, we’re constantly running through screens. We’re reading research, we’re looking at price movements, we’re looking at insider action a lot of the time, when insiders are buying or selling, to potentially point something out to us. But then once we identify something that looks interesting, it has to then be better than what else we have in the portfolio. So we have a group of things that we own and like, but at the same time, we’re constantly comparing new ideas to see if it can be a fit in the portfolio. And how we make changes is going to be directly relevant to that thesis. In some cases, we’ll have a name that the investment thesis completely changed with the latest earnings report or something went out the window. And then we’ll have an ability to either add something new or bump something up. But it’s always about constantly looking for new ideas that could be undervalued and then trying to figure out the right way to weight ’em. Because as unconstrained investors, all of our torque is in position sizing and the weights. We’ve made a lot of mistakes and oftentimes the answer to those mistakes is sitting right in our portfolio. It almost always is. We should own more of that and less of that. And so I spend a lot of time just going through the portfolio and figuring out where the relative weights should be. But I would say at a high level, probabilistic fundamental value.
[00:30:38] Barry Ritholtz: Probabilistic fundamental value. I like that phrase. When you’re looking at fundamental values, how do you distinguish between something that’s only temporarily out of favor, temporarily hated, to, oh, this business model is structurally broken. How do you avoid the classic value traps?
[00:30:57] Bill Miller IV: Well, we don’t always, unfortunately. Just because something is undervalued doesn’t mean that other people are gonna agree that it’s undervalued. So I think that’s an important thing to keep in mind too. And it’s important to use the markets to help you figure out how to change your position sizes. ‘Cause sometimes you start legging into something and it just keeps going down. You should probably heed the market’s feedback a lot of the time relative to your own positions and their sizes. So one of the key reports that my dad looked at every day, I still look at every day, is our daily performance report. And basically it just has the entire portfolio ranked by weight and then how it’s done over the past day, how each name has done over the past day, week, month, quarter, six months, a year.
[00:31:50] Barry Ritholtz: What about the reverse? When something’s working out, do you pyramid and add to the position as it runs?
[00:31:56] Bill Miller IV: It depends. So we just, you know, I know you don’t like to talk about short-term stuff and market-related things, but we just eliminated our Google position a few days ago. So we, I mean, that had a great 2025. And we actually got the investment thesis right. Hopefully we got the exit right. But the thesis there was, okay, here’s Google. This should be a huge AI winner. Everyone was concerned about their search business at the time and AI replacing search. And our position was, hold on, this trades at a massive discount to the Mag Seven. It trades at a discount to the market on an earnings and cash flow basis. Yet it has all the distribution mechanisms for AI. They’re in seven out of 10 phones globally, and all the technology capability to implement AI. I mean, they’re a giant tech brain trust. And they had a ton of funding to build it with. And YouTube, Waymo, all these other insane businesses, and it was trading at a discount to the market. It just didn’t make any sense. So we bought that. That’s probably fairly valued today. And obviously one of the classic mistakes is selling things too early. Could it continue to compound? Yes. But if you look at why the whole Mag Seven hyperscalers have done so well over the past two to three years, the answer has been number one, growing faster than everything else, and number two, they’ve got these huge incremental free cash flow margins. But if you look at what’s been going on recently, they don’t really have big incremental free cash flow margins anymore because they’re dumping so much money into the AI space that there really is no free cash flow. And now you’re betting on it materializing down the line.
[00:33:47] Barry Ritholtz: So where do you take the other side on the AI situation?
[00:33:51] Bill Miller IV: You know, if you actually look at the dollars required to be found in revenues five years out, they’re so substantial that number one, they’re bigger than the entire software-as-a-service business right now globally around the world. And number two, the total revenues that are required to justify all the investment that’s gone in is bigger than the combined revenue of the Mag Seven today. And those companies have been scaling for 30 to 40, 50 years in some cases. And so you gotta find that in five years to make all this investment worth it. And if you think about the structural way it works, it’s all this CapEx investment upfront, and then it’s very little marginal cost. So you potentially have a race to the bottom on pricing on the top line in a few years as well. So that gives us a little bit of pause, whether or not it’s right, who knows?
[00:34:47] Barry Ritholtz: So what I’m hearing is that there’s a probabilistic quantitative discipline. You’re looking at value, you’re looking at growth rate, you’re looking at risk, combined with a qualitative judgment about management and specific industry. And whether these moonshots are gonna pay off or not. How do you balance between the squishy qualitative side and the more quantitative, mathematical side?
[00:35:13] Bill Miller IV: Well, I think there always has to be a quantitative value perspective in anything we’re buying and thinking about, often from a total addressable market perspective versus the current valuation. One of the big themes for us also is alignment. So we wanna see managers actually using their capital. So it’s capital allocation and alignment. Are they using their capital in ways that align with our view of the stock? Are they buying back a lot of shares if it’s mispriced? Hopefully, yes. Are they aligned with you as a manager of the company? Principal-agent conflict is one of the biggest sources of value destruction you can possibly imagine. And so that’s important to us. As managers, we are the biggest investors in our own funds as well, so we think that’s important.
[00:36:04] Barry Ritholtz: Oh, really? Very interesting.
[00:36:06] Bill Miller IV: Yeah. But it’s a first-principles-based approach. One of the things we pay special attention to, I think more so than most, and can be opportunistic about moving on, is insider activity. So when you see a big insider buy, if you can then reverse engineer a quantitative value perspective into that insider buy, that makes a lot of sense. That can be a really compelling signal.
[00:36:30] Barry Ritholtz: I just saw a big Wall Street Journal piece on, do insider buys indicate future performance? And I saved it. I haven’t read it yet. What’s your take? The assumption is, there’s a million reasons to sell a stock if you need liquidity, there’s only one reason to buy a stock. Do you stay with that conclusion?
[00:36:51] Bill Miller IV: Insider buying is indicative of positive things to come. I think it’s a potentially high-signal source of information. In the aggregate, does it necessarily guarantee it? No. But if you can contextualize and say, okay, this CEO is really smart, he’s done this sort of thing in the past, he has a plan for this company, here’s what it’s looking like, and he just put a huge amount of personal capital in. That can be a really good signal.
[00:37:19] Barry Ritholtz: So it’s not binary. There are other factors that have to be considered. It’s a little more nuanced than the way we typically think of it. Context matters. Always really interesting. Coming up, we continue our conversation with Bill Miller IV, Chief Investment Officer at Miller Value Fund, talking about today’s market environment. I’m Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio.
[00:37:47] Barry Ritholtz: I am Barry Ritholtz. You’re listening to Masters in Business on Bloomberg Radio, or watching us on YouTube Television. I’m speaking with Bill Miller IV. He’s Miller Value Fund’s Chief Investment Officer and portfolio manager. He works with his father, Bill Miller III, the famous value investor. So let’s talk about what’s going on in the current environment. If you look at today’s markets, where do you see things that are very much mispriced, either by asset class, sector, geography, factor — what’s out there that’s not fully priced, or what’s out there that’s overpriced?
[00:38:25] Bill Miller IV: Yeah, I think aspects of the current environment remind us of 1999. So you’ve had a narrative-driven performance led by AI. A very narrow market for the most part with Mag Seven leading, huge returns to the momentum factor last year. But then if you look at the actual macroeconomic backdrop, you’re seeing deregulation, you’re seeing weaker dollar, and you’re seeing economic acceleration potentially in the US. And so when you think about all those things combined, and you look at what happened between 1999-2000 all the way until ’06-’07, you had the market go effectively nowhere for seven years. I mean, it went down and bounced around. Because I think valuation heading into that period was very high. But what did really well during that period? Actually, small- and mid-cap value. And if you look at the relative valuation discrepancies today between SMID value and large growth, they’re right at the same sort of extremes that occurred in 1999. And so you have the same valuation extremes. You have compelling valuations in a lot of the small-cap, mid-cap value space, and you have an economic acceleration backdrop. So that means that a lot of more cyclically oriented things, value-oriented names that care more about what’s going on in the economy, there’s a much lower hurdle rate for those guys to exceed the expectations embedded in the valuations over the next five to seven years than there are in the massive AI space.
[00:39:59] Barry Ritholtz: So let’s talk a little bit about small- and mid-cap value. Last year, 2025, we only saw two of the seven Mag Seven outperform the S&P 500, which tends to suggest, hey, maybe this is broadening out. We’re gonna see more mid-caps and more small-caps. The value skeptics are gonna say, hey, we’ve had so many false starts in value. It’s been 15 years of growth winning. How do you respond to that?
[00:40:25] Bill Miller IV: Yeah, I think that those snapbacks can be violent. We actually had one of our research providers recently called mid-cap value a quote-unquote inferior asset class. I mean, that sounds like capitulation to me. There’s a lot of unloved stuff out there.
[00:40:42] Barry Ritholtz: That’s really interesting. So energy? What sectors?
[00:40:45] Bill Miller IV: Yeah, energy’s interesting to me right now. You know, if you look at its weight in the market, it’s three or four percent. But if you look at its free cash flow contribution over the next year to the market, it’s gonna be 10 to 12% most likely.
[00:41:02] Barry Ritholtz: What’s that historic relationship look like?
[00:41:04] Bill Miller IV: I don’t know if it’s that large to be honest, that gap. And so, you know, energy’s unloved. It’s underperformed for so long. It’s not the best industry from a capital allocation alignment perspective, but it’s gotten a lot better over the past few years and I think you could see those types of stocks do really well. You know, sadly I do think it’s a really cheap call option on global strife right now. Energy prices, they’re bouncing pretty close to the marginal cost of production.
[00:41:36] Barry Ritholtz: Which is shocking when you think about Russia and Ukraine and Gaza and Israel and what’s going on in Venezuela and who knows what’s gonna happen. By the time this comes out, we can own Greenland. So given all of that, what does it mean to see, despite all this geopolitical turmoil, energy prices are almost reasonable?
[00:41:57] Bill Miller IV: Yeah, they are. They’ve started to turn up and energy’s done well over the past few weeks. It could continue to do really well. So that’s why we’re overweight energy.
[00:42:08] Barry Ritholtz: What other sectors do you like?
[00:42:10] Bill Miller IV: You know, financials, we’re still overweight. I think you’re gonna continue to see curve steepening and that should be decent earnings growth in those. I think utilities are finally attractively valued again at 10 to 13 times earnings in a lot of cases with very clear growth pathways. And I’d say little risk. We don’t have enough energy in the country and utilities are pretty attractive here, especially as AI and data centers continue to come online.
[00:42:40] Barry Ritholtz: You take very concentrated positions, at least compared to traditional value managers. How do you position-size these? Is this just strictly a function of, hey, we’re not closet indexers. We have a high active share, and when we have high conviction, we really go all in? To follow the poker analogy?
[00:43:00] Bill Miller IV: Yeah, that’s a good way of putting it. I mean, if you consider that most stocks underperform the index for their lifetime in it, it’s an interesting exercise to come at it from the entire other side and just say, okay, what are the 10 to 15 names that you think have the highest probability of actually outperforming? Instead of what most active managers do, which is they have these risk constraints and they can only overweight certain sectors a little bit. The closer you are to the benchmark, the more likely you are to underperform it, ’cause you’re just layering higher fees on something that looks more like the benchmark. So we’re very comfortable taking bets entirely outside of the index with the obvious caveat that there’re gonna be periods when we’re gonna underperform meaningfully, just ’cause we’re taking entirely different risks. And there’ll be some periods where we outperform by a lot. So I think that’s really the only way to do it, is to not be a closet indexer. And you have to match the investment process to your IP. For us, thinking that the edge is on the 37th page of the Excel spreadsheet’s just not realistic. If you’re Fidelity and you got a guy that’s been following a certain industry for a long period of time and really understands the nuances of every single company and what could change, that might make sense, but it just depends on what you’re trying to do, and you have to match up those two things.
[00:44:35] Barry Ritholtz: So we’ve been kind of dancing around AI throughout this conversation, so let’s talk about that a little bit. Are you thinking of AI as its own investment entity? Are you thinking of it as disrupting traditional business models? Are you thinking of other businesses, forget the Mag Seven, the Mag 493, as being the beneficiaries of AI to be more productive, efficient, profitable? How are you thinking about AI as an investor?
[00:45:03] Bill Miller IV: I think it’s all of those things. Yeah, it’s all those things. I use it all day every day.
[00:45:09] Barry Ritholtz: How do you use AI throughout the day for your process, both for selecting investments and just managing a large investment firm?
[00:45:18] Bill Miller IV: Well, it’s an enormous time saver, and it’s not necessarily always a time saver on the investment front, although it often is. It can just be a time saver personally. Like if you have an interpersonal issue that is weighing on you, sometimes you just throw it into AI and you get a better answer than you could’ve gotten from asking your three closest friends and move on. So if you’re thinking in units of time, it’s a huge time saver for me personally. I think a lot of life is about asking the right questions, and you got a pretty good set of answers there, or method for answering questions. You pointed out earlier it can be wrong often, and you have to consider that, but it’s got a lot of good perspectives in there that can bring to bear on a lot of different things.
[00:46:09] Barry Ritholtz: So what tools do you use? What’s your favorite AI at the moment?
[00:46:13] Bill Miller IV: We have ChatGPT and Gemini going for business, both for business. And then we’re also adding Claude here soon. I just put Claude on a couple of desktops and a laptop. And the coding side of it is really fascinating. And I can see why people are concerned that this could replace certain, at least menial kind of work, grinding work. Like, oh, it does this so much faster and better than I could ever grind out on my own. Yeah, Claude, especially Claude Pro, it’s really kind of impressive. And the question is, is $200 a month a lot? Is that not a lot? Is that a fair price?
[00:46:51] Barry Ritholtz: I think it sounds like a lot of money compared to, what is Perplexity, 20 bucks a month? That seems like practically free for that much power. So you’re using it everywhere.
[00:47:02] Bill Miller IV: Yeah.
[00:47:03] Barry Ritholtz: What are you hearing from your peers? Is this the sort of thing that everybody has gone all in on? Is the fear, hey, if we don’t do this, our competitors are, so we better step up?
[00:47:15] Bill Miller IV: I don’t know if it’s fear just as much as the ability to cover so much more ground in the same amount of time or less. You know, it’s just a super powerful technology and we use it a lot.
[00:47:27] Barry Ritholtz: Really interesting. So I wanted to get to this question. We’re talking about the current environment. AI is obviously a game changer, but we’ve gone through a few decades of major regime changes. We had the era of monetary policy and then starting in 2020, we’ve had the era of fiscal policy. When you’re looking at central banks and the government, higher for longer, zero interest rates, all these different things, how do these geopolitical variables affect how you think about putting capital to work? How you think about risk?
[00:48:02] Bill Miller IV: Well, I think one really big-picture change, going back over the past decade to today, is coming out of the financial crisis, capital effectively had no cost. I mean, you saw the insane amount of money printing that occurred, but that’s because that was to offset a huge hole in CapEx that had gone into housing that wasn’t necessarily needed. And we had to work that out from a supply-demand perspective. And we’ve now done that. But if you go back and read what the Fed said, there was a study that came out of the San Francisco Fed where they used computers to look at the language that was used in meetings about how to set rates. And what they found was that the 2% inflation number that’s the bogey was supposed to be a symmetrical goal. It wasn’t symmetrical at all the way they were setting rates between roughly 2010 and 2020. And so that has an enormous implication for the way all kinds of different assets perform. And I think that’s why massive growth had the run it did over the past decade. ‘Cause when capital has no cost, you’re willing to look out a huge distance.
[00:49:13] Barry Ritholtz: Embrace more risk. ‘Cause what are you gonna get? One-and-a-half, 2%? It doesn’t make sense otherwise.
[00:49:20] Bill Miller IV: Exactly. And so that’s why huge growth had the run it did, ’cause capital had no opportunity cost. And now if you look at where we are with mortgages at 6% and capital actually has a cost again, it has major implications for the kinds of assets that are likely to do well in the future. And it comes back to the whole theme we talked about earlier around SMID value cap, more capital-intensive things potentially having a better decade now that capital has a cost again.
[00:49:51] Barry Ritholtz: Let me share a favorite factoid with you. Former Fed Vice Chair Roger Ferguson wrote a white paper on the origination of the 2% target. And he traced it back to some random television interview in the 1980s in New Zealand where someone threw out 2% and that was it. It just magically stuck. And you can find that paper online. It’s pretty hilarious. It’s just such a random number. There’s no underlying thesis for why it’s two and not three or one.
[00:50:21] Bill Miller IV: Yeah, it just seems like, that sounds about right. Well, I think it’s gotta actually be higher than that if you think about it, because certainly in an era of fiscal rather than monetary stimulus, you’re gonna inherently have higher prices.
[00:50:37] Barry Ritholtz: Well, I mean, if you think about the fact that most consumers’ overwhelming savings vehicle is their home. What’s the blended rate on mortgages right now in the system?
[00:50:48] Bill Miller IV: Four and a half.
[00:50:49] Barry Ritholtz: Yeah. Well, half the individually owned homes, there are no mortgages. And the remaining half, it’s a crazy set of numbers of two-and-a-half, three, three-and-a-half, four. Everybody was smart, locked in a fixed rate before the pandemic.
[00:51:04] Bill Miller IV: Well, so if house prices in the aggregate don’t appreciate by more than that interest rate, people are going broke in their primary savings vehicle. So housing actually does need to increase in value over a long period of time or people slowly go broke. So I think that 2%, I know it was thrown out there, but I think it actually has to be higher over the long term to kind of make the math work for most people.
[00:51:32] Barry Ritholtz: I couldn’t agree more. Alright. I only have you for a limited amount of time. Let’s jump to our favorite questions, some of which I know the answers to. Starting with, who are your mentors who helped shape your career?
[00:51:46] Bill Miller IV: Wow. So Mr. Keeney was my dad’s original business partner, and he’s a fascinating human. Worked until the day he died, I think 92. An incredibly nice human being. I don’t think he ever said a bad word about anyone. One of the things that was so interesting to me about Mr. Keeney is he didn’t start his career at Legg Mason in research until he was 50. So a lot of young people think, oh, here I am locked in this career. Oh, there’s always time to switch. And then he hopped over at 50 to start this role where he had a prolific career and influenced a lot of people and did that for 40-something years. So he was a very smart guy. Generous to a fault. One of my favorite stories about him: him and my dad were heading out for lunch one day, downtown Baltimore. And a homeless person comes up and starts with the story. I haven’t eaten in this many days, and blah, blah, blah. And Mr. Keeney sits there listening to it, and he gets out his wallet and he gives her, I think it was like a $50 bill. And he says, oh ma’am, here, just go get yourself some hot soup. Take care of yourself. And she looks at it, she looks back at him, she looks at it. She goes, the hell with soup, I’m gonna get me some whiskey.
[00:53:06] Barry Ritholtz: That’s a great story.
[00:53:07] Bill Miller IV: So he was incredibly generous. A human being who contributed a lot to animal welfare stuff. I’m a big believer in animal welfare causes. So he was an influence on me. I can also think of a handful of times from business school that, not necessarily an individual mentor, but just one-liners from business school that I remember over the years. So that line I gave you earlier about Ken French and how long it takes for a manager to prove whether or not his work is statistically valuable or not. The other one-liner he told us is never pay a load for a mutual fund. He said, if there’s one thing you take away from my class, it’s never pay a load on an investment fund.
[00:53:51] Barry Ritholtz: And that’s certainly still true today. Let’s talk about books. What are some of your favorites? What are you reading right now?
[00:53:59] Bill Miller IV: Right now I’m reading a book called The Mattering Instinct, by, I think it’s Rebecca Goldstein. But it’s a fascinating book on the mattering instinct. And it’s about people’s desire to matter and what that means. So there’s a lot of psychology in it. There’s a lot of philosophy in it. The basic premise is that we’re all just trying to overcome entropy. The tendency for disorder and systems to increase and we’re all gonna die eventually.
[00:54:29] Barry Ritholtz: I was gonna say it’s a losing battle, but while we’re here.
[00:54:32] Bill Miller IV: Exactly. Well, let’s do something interesting. So that’s what I’m reading now. I just read prior to this, Let Them, the Mel Robbins book. I think it’s the best-selling book last year. And I can sum that one up pretty succinctly. It’s focus on what you can control and don’t let anything else get to you.
[00:54:52] Barry Ritholtz: Sounds like good advice.
[00:54:54] Bill Miller IV: It’s good advice. And I mentioned that to my dad ’cause I was reading it and he’s like, oh, haven’t they, did you ever read Marcus Aurelius? This is Meditations. This is not a new idea. Stoicism created the idea of controlling what’s within your control 2,000 years ago.
[00:55:12] Barry Ritholtz: Exactly. And I have read that, and that’s a phenomenal book as well. It’s just good to have more modern stories that you can relate to. What’s keeping you entertained these days? What are you streaming? Either podcasts or Netflix or whatever.
[00:55:28] Bill Miller IV: That’s one of my things I don’t really do. No Netflix. I’ll watch competitive events. I’ll watch sports, I’ll watch an occasional standup comedy show, but I don’t watch the series.
[00:55:40] Barry Ritholtz: Did you see the Australian Open this year?
[00:55:42] Bill Miller IV: I did. I watched some of that. It was pretty awesome. I have the finals DVR’d. I haven’t watched it yet, but I know you’re a tennis guy.
[00:55:51] Barry Ritholtz: Yep. It’s rare to find someone who can take Djokovic and put him back on his heels.
[00:55:57] Bill Miller IV: Yeah, well the Sinner match was pretty awesome. I’m saving these, I watch ’em like months later when I get around to it. Alright, I do golf. So that’s something I’ve just started taking up. I’m terrible. I’m an 18 handicap, high-variance 18 though, so I can have some pretty good days. But it’s interesting ’cause there’s a similarity to investing in golf: you get better at golf by narrowing your misses. And I think that’s also true with investing. If you start narrowing the misses, it’s a way to get better.
[00:56:31] Barry Ritholtz: Charlie Ellis made the same argument with tennis. Most tennis players lose ’cause they make all these unforced errors. Other than the pros, most of us would be better off being less bad rather than trying to be more good, if that makes any sense.
[00:56:47] Bill Miller IV: Absolutely. You can shave a lot of strokes doing that.
[00:56:50] Barry Ritholtz: Final two questions. What sort of advice would you give to a recent college grad interested in a career in either investing or value or what have you?
[00:57:00] Bill Miller IV: Choose your dad well. That certainly helps. I love what your father said to you in terms of creating future optionality by studying and doing well in school. I’ve never quite heard it phrased that way, but that really sums up, why do I have to study algebra? Because you’re just creating optionality. Investing is about optionality and creating more options for yourself down the road. And so anytime you can invest in yourself and create additional options is a good thing to do.
[00:57:32] Barry Ritholtz: Yeah, to say the very least. And our final question. What do you know about the world of investing, valuations, portfolio management today that would’ve been useful when you were first getting started 20 years ago or so?
[00:57:46] Bill Miller IV: Well, you know, we were talking about books earlier. I personally think that the best book on personal finance is The Psychology of Money by Morgan Housel. So if you haven’t read that, anyone that gets a bank account should be required to read that and just internalize the concepts. I know if you’ve been in the industry a while, not all of it’s new, but it’s a lot of really good reminders on how you should behave to create wealth over the long term for yourself.
[00:58:17] Barry Ritholtz: Absolutely. Bill, thank you for coming in and for being so generous with your time. We have been speaking with Bill Miller the Fourth. He is the Chief Investment Officer and portfolio manager at Miller Value Funds. If you enjoy this conversation, well, check out any of the 600 we’ve done over the past 12 years. You can find those wherever you find your favorite podcasts: iTunes, Spotify, Bloomberg, YouTube. I would be remiss if I didn’t thank the correct team that helps put these conversations together each week. I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.
~~~
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Data based on IndexBox’s ammonium nitrate world market overview
Data based on IndexBox’s ammonium nitrate world market overview
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