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Bill Miller calls this e-commerce giant the ‘cheapest big cap stock in the world’

The value investor thinks this company, which is trading at a five-year low, is cheap.

Bill Miller has experienced a handful of market catastrophes during his four-decade investing career. And with the Global Financial Crisis far in the rearview mirror, he’s been again thrown for a loop.

“I didn’t expect to see another event like this before I retired,” Miller told Business Insider in an exclusive interview.

But out of that dramatic 33% market plunge comes another chance for Miller to get to work. He’s a legend of value investing, and his Miller Opportunity Fund beat the S&P 500 for 15 consecutive years in the 1990s and 2000s – a record no one has matched. And he says there haven’t been many moments like this one.

“This is good a buying opportunity as you’re likely to see,” he said. “There have been five great buying opportunities in my lifetime.”

Those big opportunities came from the market crashes of 1973-74, 1981-82, 1987, 2008-09, and the 33% plunge in stocks over the past few weeks. Miller’s fund has underperformed in the last month, which might be expected given his value philosophy and his interest in stocks that investors are failing to appreciate. But he says it fared worse during past market downturns before outperforming when each recovery began.

Miller acknowledges that the speed of the recent plunge is unprecedented, and it’s not clear if the market is really on its way back up. But he says that the giant rally over the past three days is shedding light on what longer-term healing will look like.

“On the other side [of a downturn], the names that always lead are those that are marginal returns on invested capital are most susceptible to decline on the way down, and therefore they will recover the most on the way up,” he said. “The more cyclical and the more leveraged you are, the more you went down, the faster you’ll recover.”

Miller continued: “Those are names that typically have very low P/E ratios, have more economic cyclicality and higher debt leverage, or which significantly underperformed for some idiosyncratic reasons. We’ve seen that in the last couple of days. Those latter names that I mentioned just killed the rest of the market.”

In other words, he says an investor who wants stronger returns should sell the stocks that are holding up relatively well and use the proceeds to buy the worst underperformers. Since Miller’s goal is to beat the market and get the best possible return, he argues that some of the traditional safety and “quality” stock strategies taking hold today will work out, but might be relatively disappointing when this is over.

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