Bill Miller, Miller Value Partners founder and chief investment officer, reacts to the decline in Facebook Inc. shares. He speaks with Bloomberg’s Julie Hyman, Joe Weisenthal and Scarlet Fu on “What’d You Miss?” (Source: Bloomberg)
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Miller Value Partners' Bill Miller Says Facebook Stock Is A Deal After Decline
Transcript
I want to start with technology because as we just talked about we have seen some big blow ups this week in the tech industry that have taken down the Nasdaq to some extent and at least one of them is in your portfolio. Facebook's in your portfolio. Amazon is to a little more happily for you. What do you make of the action that we have seen and that there has been some bleed through to the rest of the market but it hasn't really taken everything down.
Well actually I'm pretty happy about Facebook's decline as well. When the stock got hit we had it in the portfolio bought on the IPO sold it bought it back but it wasn't a really big position and then when it got hit in the spring when Mark Zuckerberg was hauled before Congress it fell down with roughly 190 down to about 150. And we had the position pretty significantly there. Then it went up 45 percent and now it's back down 20 percent so it's above where we were but we took that yesterday and today to top it off a little bit so it's only 17 times next year's earnings and it trades at about 4 multiple points and enterprise Wajdi but below CocaCola which is going to have a hard time growing 6 percent. And Facebook on what we think are conservative numbers even though those numbers are correct margin is down. Growth rates down. They're doing that deliberately by the way. They're still going grow 20 25 percent a year. So they suggest is just that it's cheap and that regardless of whether or maybe growth is planned tolling a little bad or got to spend more money on moderation. Getting a deal. Oh absolutely. Absolutely. It's interesting Mark Zuckerberg was interviewed and interviewed a few weeks ago and. The moderator the interviewer said you know you have an objective every year of a project and last year was like learning Mandarin a couple of years ago what is it this year. And he said to fix Facebook and I thought you know if we'd known what was coming that was probably part of what he had in mind which is there been a lot of issues and they've been struggling to keep up with with things they're going to spend a billion dollars plus on on security and safety and I think that's a good thing.
And that repair effort may create more opportunities as well. Do you think it's easier or harder to find value as the bull market ages. I mean we're now past the 9 year mark. Does that make it easier or harder.
It all depends. It's harder typically because as the bull market ages people have had a long time to pick things over. They've got things sorted out. So the stuff which is obviously good and growing usually trades at a pretty expensive multiple. This market's been a little bit different because for the first several years it was a flight to safety. It was a fear about fear of risk fear volatility. And so the bonds surrogates like utilities and consumer staples got way overpriced. Those have come back and yet we don't think they're still attractive and are other areas that you know there are quite attractive financials I think are still good. I think airlines are really good I think homebuilders are really good and selected Tech. I mean Amazon's our biggest position but Amazon's got a huge runway ahead of it. And a lot of growth in the future.
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