The coronavirus pandemic has taken a massive toll on airline stocks, but legendary investor Bill Miller is sticking with them, according to new remarks he made Tuesday evening. (Bill Miller will be on CNBC's " Closing Bell " at 3 p.m. on Wednesday.) "If you don't own the airlines, then you're making a bet against the vaccine," Miller, founder and CIO of Miller Value Partners, said Tuesday during a virtual roundtable of investors organized by Ariel Investments. "People love flying and don't worry about catching polio or smallpox, if there is a vaccine." "If there is a vaccine, that will eliminate all the issues people have about flying and these (stocks) will come back very, very quickly," Miller added. He also thinks "all the bad news" is already priced into these stocks. Miller has stakes in Delta , American and United Airlines , according to FactSet. Those stocks are all down at least 64% year to date as the coronavirus pandemic brings global travel to a screeching halt. By late April, air travel had dropped by more than 95% . The uncertainty around air travel and the massive decline in airline stocks led another legendary investor, Warren Buffett , to sell his entire stake in the space. Those holdings were worth about $4 billion. "I think there are certain industries, and unfortunately, I think that the airline industry, among others, that are really hurt by a forced shutdown by events that are far beyond our control," Buffett, chairman and CEO of Berkshire Hathaway, said May 2 during the conglomerate's annual shareholder's meeting . Miller said he doesn't disagree with Buffett's reasoning for getting out of the airlines, but added those stocks don't have "much downside risk over the next six months." Miller's comments came a sharp rebound from a low reached in late March by the S & P 500 . Since March 23, the broader market average has rallied more than 30%, led in part by shares of megacap tech stocks such as Facebook , Amazon , Apple , Netflix , Google-parent Alphabet and Microsoft . Those stocks are all up at least 19.9% through Tuesday's close. Amazon also hit a record high on April 30. Despite those sharp gains, Miller thinks those stocks are "not terribly expensive." "They've performed so well because the companies are so extraordinary in terms of return on capital, in terms of market share, in terms of defensible moats," Miller said. "For a value investor, you're trying to look at the present value of future free cash flows of the business and sustainability of all of that. So I think that most of those companies … are going to do fine." Amazon accounts for Miller Value Partners' biggest holding, making up more than 6.8% of the firm's portfolio, FactSet data shows. Miller Value also owns Facebook and Alphabet, but doesn't hold stakes in Microsoft, Netflix or Apple.
Scott Mlyn | CNBC
The coronavirus pandemic has taken a massive toll on airline stocks, but legendary investor Bill Miller is sticking with them, according to new remarks he made Tuesday evening.
(Bill Miller will be on CNBC's "Closing Bell" at 3 p.m. on Wednesday.)