While Jamie Dimon, Warren Buffett, Ray Dalio and Larry Fink have all revealed themselves to be skeptics of bitcoin, accusing it of being a bubble, at best, and a fraud, at worst, one longtime investor who made his name scooping up “value” stocks in the 1990s has quietly posted astonishing returns betting on the digital currency, predating a wave of more than 100 asset-management shops that have sprung up to manage portfolios of cryptocurrencies.
In an investor letter obtained by WSJ investing columnist Jason Zweig, Miller revealed that he had allocated 30% of his MVP1 hedge fund to bitcoin back in early 2016, when one coin was trading at $350. This year alone, his fund has soared 72.5%. Relative to the overall performance of bitcoin, which has quintupled in value this year. bitcoin has quintupled in value), but it certainly beats the performance of celebrated equity funds like Dan Loeb’s Third Point LLC, which has marginally outperformed the S&P 500’s 14%+ year-to-date return.
In keeping with his reputation as a strong judge of value, Miller has made a killing on bitcoin both personally, and for his clients. He revealed in July that had 1% of his liquid net worth in the digital currency in early 2016. We imagine that percentage is now dramatically higher.
Yet for all the success it has brought him, Miller is no bitcoin evangelist. Instead, he has a more sober-minded view of the currency, and - secure in the quality of his returns - was willing to admit to his investors that he has no idea what bitcoin’s long-term fate might be.
“My view on bitcoin is that it is a technological experiment that may or may not prove to have any long lasting value,” Mr. Miller wrote in his letter.
“Bitcoin has a market capitalization greater than 90% of the companies in the S&P 500, but it still might fail. I don’t know and neither does anyone else, no matter how certain they are of their opinion.”
As of Friday, Bitcoin had a total value in circulation of approximately $96 billion, according to coinmarketcap.com. Added Mr. Miller,
“I believe there is still a nontrivial chance bitcoin goes to zero, but each day it does not, that chance declines as more venture capital flows into the bitcoin ecosystem and more people become familiar with bitcoin and buy it.”
Miller, who’s best known for beating the S&P 500 for 15 consecutive years between 1991 and 2005, parted ways with Legg Mason in 2016, five years after stepping down from managing the firm’s flagship Legg Mason Capital Management Value Trust fund. His 35-year tenure at Legg Mason made him a household name in mutual fund investing, however his persistent bullishness cost him dearly during the financial crisis, where he endured a reputation-sullying 55% annual loss. Some of his holdings at the time included AIG, Freddie Mac and Eastman Kodak.
As Forbes revealed in a profile earlier this year, Miller has also profited greatly this year from his Amazon holdings.
What’s more surprising is that his big bet on bitcoin isn’t even his most outlandishly shrewed investing decision in recent years. As Forbes reported, a few years back, Miller bought the rights to the lyrics of Bob Dylan’s 1960s classic “Blowin’ in the Wind”. Last year, Dylan became the first songwriter to win the Nobel Prize in literature.