MVP LIVE January 2026

Opening Comments

David Yazdan

  • Market mispricings are widening, creating an environment that historically favors skilled active managers—particularly in small- and mid-cap equities.
  • Macro distortions are driving valuation dispersion, including AI-related exuberance, shifting Fed policy, and extreme investor concentration in a handful of mega-cap technology stocks.
  • Passive indexes face growing constraints, as capitalization-weighted benchmarks remain dominated by large-cap tech and are unable to access emerging opportunities elsewhere.
  • Experienced investors see opportunity beyond mega caps, with early-stage bubble dynamics in large-cap tech alongside attractive valuations in overlooked segments of the market.
  • Small caps appear positioned for a cyclical turn, supported by falling rates, normalized inflation, earnings recovery, and improving structural conditions.
  • Rising corporate activity is creating idiosyncratic catalysts, particularly in smaller companies where price discovery is less efficient and passive ownership is lower.
  • These conditions favor active management, where bottom-up analysis and flexibility are essential to capturing company-specific opportunities.

The Fed’s Pivot: Why Liquidity Matters Now

Bill Miller IV CFA, CMT

  • A major Fed policy shift is being overlooked: Media narratives understate the significance of the Federal Reserve’s December pivot, which marked a meaningful change in how policy is being implemented.
  • Quantitative tightening has ended: After several years of liquidity withdrawal, the Fed has reversed course—moving from removing roughly $50 billion per month to injecting approximately $40 billion per month into the system.
  • Liquidity matters more than rate cuts alone: Balance sheet policy influences economic activity and asset prices more directly and with shorter lags than interest-rate signaling.
  • Inflation dynamics give the Fed room to act: Real-time inflation measures suggest inflation has normalized, allowing liquidity to be added without undermining price stability.
  • Economic fundamentals remain supportive: GDP growth, real wage gains, and a still-expanding labor market point to resilience and the potential for renewed economic acceleration.
  • The economy appears early in a new liquidity cycle: Liquidity injections tend to work quickly, suggesting the initial stages of a broader economic and market inflection.
  • Liquidity-sensitive assets may benefit first: Assets most exposed to changes in liquidity conditions have historically responded early in easing cycles.
  • Current conditions align with a constructive portfolio stance: The evolving policy backdrop is supportive of risk assets and underpins an optimistic outlook for portfolios positioned to benefit from improving liquidity.

Setting the Stage for a Shift in Leadership

Daniel Lysik, CFA

  • Large-cap valuations are near historic extremes: The S&P 500 ended the year at ~22x earnings versus a 30-year average of ~17x, with cyclically adjusted valuations near levels previously seen only in 1999–2000 and 2021 — suggesting more muted forward returns.
  • Market concentration is at all-time highs: The top 10 stocks now represent roughly 41% of the S&P 500, far exceeding prior peaks, despite contributing a smaller share of overall earnings growth.
  • Broad market participation has been narrow: Over the past three years, the average S&P 500 stock underperformed the index by more than 25%, a rare dynamic historically followed by periods of market broadening.
  • Small caps are deeply discounted relative to large caps: Valuation spreads are near historical extremes across multiple measures, comparable to prior cycle troughs such as 2000.
  • Relative performance is at an inflection point: Small caps sit in the lowest decile of rolling 10-year relative returns versus large caps, a setup that has historically preceded extended periods of outperformance.
  • Under-ownership creates asymmetric opportunity: Small caps represent a historically low share of total equity ownership, suggesting even modest reallocation could drive meaningful relative performance.
  • Multiple catalysts support active positioning: Rate cuts, earnings re-acceleration, deregulation, and favorable tax policy provide a supportive backdrop for small-cap profitability and valuation normalization.
  • Early signs of leadership rotation are emerging: Recent market action shows value and small caps beginning to outperform growth and large caps, consistent with the early stages of a new cycle.
  • Active, bottom-up strategies are increasingly important: Elevated dispersion, company-specific catalysts, and inefficient pricing favor active management over cap-weighted passive exposure.

    • Miller Value Funds Update

    Miller Income Fund

    • Attractive income with deep value support: LMCLX as of 12/31/25 at a 4.43% current yield (6.07% 30-day SEC yield / 5.96% 30-day SEC yield w/o waiver) with holdings trading at significant discounts to the S&P 500.
    • Compelling valuation profile: ~9.4x price-to-free cash flow and ~6.2x EV/EBITDA—representing discounts of ~70% and ~65%, respectively, versus the S&P 500.
    • SMID-cap, value-oriented exposure: Portfolio skewed toward small- and mid-cap companies positioned to benefit from improving liquidity and valuation normalization.

    Learn more about Miller Income Fund

    Miller Value Partners Appreciation ETF (MVPA)

    • SMID-cap value at a substantial market discount: ~12.4x price-to-free cash flow and ~10.7x EV/EBITDA—still meaningfully cheaper than the S&P despite selective additions.
    • Thematic exposure aligned with current tailwinds: Core themes include digital marketing, housing reacceleration, digital assets, and dominant infrastructure platforms.
    • Positioned for broadening market leadership: Portfolio reflects a bottom-up approach focused on undervalued businesses with improving fundamentals and secular growth drivers.

    Learn more about MVPA

    Miller Value Partners Leverage ETF (MVPL)

    • Geared toward periods of improving liquidity: Positioned to benefit from market environments characterized by easing financial conditions and expanding participation.
    • For investors seeking enhanced upside potential: Intended for sophisticated investors who understand and can tolerate the additional volatility associated with leverage.

    Learn more about MVPL

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