Licking his wounds from a 20 percent loss in the past month, value investor Bill Miller, who's had a strong track record over the years, said Wednesday he's not giving up on stocks and likes airlines and homebuilders.
"We're up six [or] seven times on all of our airline positions," said Miller, who manages the Legg Mason Opportunity Trust fund through his Baltimore-based investment firm LMM. Delta Air Lines, American Airlines and United Continental are the three top holdings.
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Over the past five years, airline stocks have been riding a wave of consolidation, and more recently been benefiting from lower oil prices. But since the beginning of the year, the carriers have been hit hard in the stock market turbulence.
"They're terrible. They go down every day," said Miller, who's not ready to bail on the sector, "maybe if the results were worse, a lot worse."
But as of now, he said: "They're earning good returns on capital. And they're doing it in an environment where the U.S. economy, the nominal GDP growth rate, is kind of punk. But they're still earning record profits."
LMM, which has $2.1 billion of assets under management, is partially owned by Legg Mason.