Buy Amazon, short Valeant among the top picks out of last year's Delivering Alpha

Key Points
  • Tracking the stock picks of top investors in the year since they made predictions at the last Delivering Alpha conference.
  • Bill Miller's best pick was Amazon, up 27 percent in the last 12 months.
  • Jim Chanos' call to short Valeant came before the stock plunged 52 percent over the last year.
Bill Miller
David A. Grogan | CNBC

At last year's Delivering Alpha conference, Bill Miller of Miller Value Partners opened with a quote read by someone at a party honoring Marxist revolutionary leader Leon Trotsky decades after his death: "Proof of Trotsky's farsightedness is that none of his predictions have come true yet."

One year later, some of Miller's predictions at that conference were successful, as were some picks by other prominent investors who spoke on the "Best Ideas" panels. But some ideas may need a bit longer to pan out.

Regardless, as this year's event draws near – on Sept. 12 – it's clear that the tips from investors during the conference are worth tracking. Returns on last year's picks are based on what the stocks and bonds did from Sept. 12, the day before last year's conference, through Sept. 8 of this year. The managers may have traded in and out of these positions since then.

Robert Bishop of Impala Asset Management touted Teck Resources, a mining stock that's skyrocketed 43.5 percent over the last year. He said demand from China had been improving and that metals were largely in a supply/demand deficit, including copper, nickel and aluminum.

The gains were even higher before China Investment Corp. sold about half of its stake in Teck Resources on Sept. 5, sending shares down nearly 7 percent in Toronto. But the stock was certainly among the biggest winners of last year's picks.

Miller, who changed his firm's name earlier this year from LMM to Miller Value Partners, urged investors to go long the , which is up 16 percent since then, and he recommended investors short the 10-year Treasury. Yields are about 40 basis points higher from the date before last year's conference.

Miller's best long pick was Amazon, which he said would grow 25 percent to 30 percent a year for the next three to five years. Shares of Amazon gained 27 percent over the last 12 months.

While the stock is down from its peak over the summer, Amazon has enjoyed quite the run-up over the last 12 months, fueled by investor hunger for growth and the company's seeming ability to turn any market it touches into gold.

Miller said at last year's conference that unlike Facebook and Google, which are each competing for the advertising market, Amazon is targeting the retail market, which is 10 times the size of the ad market. That gives the company a much larger total addressable market to tackle in the long run, he said.

Miller and Kynikos's Jim Chanos each took opposing bets on shares of the pharmaceutical company Valeant.

Miller was long, Chanos was short, and Chanos turned out to be correct. The stock plummeted 52 percent since last year's Delivering Alpha conference. If Miller is patient, this pick could still work. He said he was expecting Valeant to return 25 percent to 30 percent over the next five years. He still has four to go.

Most analysts say they believe Valeant's recovery -- following a scandal involving drug-price hikes, the use of specialty pharmacy Philidor Rx, a federal investigation, and a series of management changes -- still needs more time.

Chanos' record wasn't perfect, either. He urged investors to short Tesla, citing corporate-governance concerns about its merger with SolarCity, given that both companies were founded and led by Elon Musk. But the electric car maker's stock is up 77 percent over the year.

Chanos will be back again at this year's conference with some new ideas for the audience. Other investors presenting their "Best Idea for Alpha " include Leon Cooperman, the chairman of Omega Advisors; Jeffrey Smith, a chief executive officer of Starboard Value; and Mick McGuire, the founder of Marcato Capital Management.