The market continued to move higher in the first quarter despite continued negative news of increasing COVID-19 cases globally and new lock-down orders. Countries across the world began to administer COVID vaccines as the race against variants began. The quarter started with concerns around the peaceful transition of power in the Unites States following the US Capital riots, but Joe Biden was sworn in as President of the United States on January 20th. Biden signed the $1.9T COVID relief bill clearing the way for more stimulus checks as well as vaccine aid. By late January, users of r/wallstreetbets initiated a short squeeze on GameStop following a short report by Citron Research. A handful of other value names also experienced some short squeezes but none as significant as GME. Severe weather in the South of the United States lead to power outages across Texas and pushed up oil and gas prices. Bitcoin continued to gain traction as a number of companies, including Square and Tesla, transferred a portion of their cash holdings into the cryptocurrency. Non-fungible tokens also attracted attention in the quarter with a number of large digital artwork sales occurring. Shipping delays received another blow as a container ship known as the Ever Given became stuck in the Suez Canal for six days. The Fed has left rates unchanged and indicated that it is highly unlikely we would see any rate hikes this year.
The Dow Jones Industrial Average rose 8.29% ahead of the S&P500’s return of 6.17% and the Nasdaq Composite’s return of 2.96%. All eleven sectors posted positive returns during the period with Energy, Financials and Industrials posting the largest increases with returns of 30.84%, 15.90% and 11.41%, respectively. Small-cap stocks outperformed mid-cap stocks, which beat large-cap names. Specifically, the Russell 2000 Index rose 12.69% compared to the Russell Mid-Cap Index, which returned 8.14%, and the Russell 1000 Index, which gained 5.90% for the quarter. Value stocks continued to hold onto their lead over growth stocks, as the Russell 1000 Value Index gained 11.24% compared to the 0.94% return of the Russell 1000 Growth Index over the same period. Bonds were negative over the period with the long-dated US Treasuries returning -13.9% while US corporates did better with the Barclays Aggregate returning -3.37%. The US Dollar Index gained 3.66% for the quarter while gold gained 7.17% and oil gained 21.93%. Bitcoin continued climbing higher reaching $58,960 at quarter-end returning an impressive 103% during the period.
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Bill Miller's 1Q 2021 Market Letter
Infographic: 1Q 2021 Market Snapshot
The views expressed in this commentary reflect those of Miller Value Partners analyst(s) as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.
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