Bill Miller's mutual fund crushed the market for a record 15 straight years, and he's still beating his peers. He outlined for us the top 4 contrarian bets he's making right now.

• Mutual fund manager Bill Miller is famous for beating the stock market for a record 15 years in a row in the 1990s and 2000s, and he's maintained his sterling track record since then.
• Known as one of the great value investors, Miller focuses on companies that he believes are trading for much less than they are really worth.
• Asked about his most surprising contrarian investments, Miller named several groups of stocks that endured huge drops because of issues like public controversies or high levels of debt.
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Long after the conclusion of his famous winning streak, and long after his style of investing became unfashionable, Bill Miller has continued to beat the market.

Miller gained fame by beating the stock market for 15 consecutive years ending in 2006, a record he still owns. Today he's bringing in huge returns at Miller Value Partners, which manages $2.6 billion. For context, his Miller Opportunity Trust beat 99% of its peers over the past 3 years and has handily beaten the S&P 500 since its inception in 1999.

It's all the more impressive because Miller is a value investor, focused on stocks he believes are fundamentally strong but are undervalued by the broader market. And throughout the 11-year bull market, those stocks haven't done nearly as well as growth stocks, which are characterized by faster earnings expansion.

That means Miller's portfolio contains some surprising investments, but he thinks the rest of the market will ultimately see what he sees.

"We like those things where we can see the turn coming and where the market doesn't like them," he told Business Insider in an exclusive interview.

One thing that ties those investments together is Miller's search for companies with strong free cash flow and that consistently earn above their cost of capital. When he finds companies with those qualities and low valuations, he's often willing to bet on them even when few others are.

He outlined for us four contrarian investment areas he's betting on right now:

(1) Opioid drugmakers

The three publicly traded companies linked to the opioid crisis, Teva Pharmaceuticals, Endo International, and Mallinckrodt, have all plunged in value as the crisis spread.

"Those are names that people were afraid to show in their portfolio because the headlines are so bad every day," Miller said. "People just destroyed those stocks last year."

The bad publicity and legal costs are real, but Miller says investors wrongly concluded that the companies might go out of business as the result of liability lawsuits relating to the drugs and how they were marketed. He notes stock have rallied in the last few months because Wall Street is starting to realize the companies will survive.

He thinks the lawsuits will end in a settlement that sets the stage for a bigger rally. He thinks the share prices of Endo and Mallinckrodt could double, and Teva could rise 50%.

"The businesses are all doing well," he said. "We see that over and over again in product liability stuff where people talk about the billions of billions of dollars in liability ... those things are mostly settled, and if they're not settled, the penalties are usually much less."

(2) Airlines

Miller has owned Delta since 2008 and American since 2013, and the stocks have endured up-and-down performance over the last few years. But Miller says the airline business is in much better shape than it was years ago, partly because of consolidation.

"Even though the stocks have done really well, they trade at the same valuation that they did when the airline industry was terrible and the companies were going bankrupt or going to right and left," he said. "The valuation hasn't moved up on those. We think that'll move up pretty significantly."

Those views can change slowly. Miller says he asked Warren Buffett in 2016 if he was thinking about adding airlines to Berkshire Hathaway's portfolio. He says Buffett rejected the idea, but not long after, Berkshire became Delta's biggest shareholder and one of the largest owners of United and American as well.

"It took them a while to figure out and get comfortable with that change in the airline business," he said.

(3) M&A disasters

Two of Miller's largest investments are in companies that have been dragged down by failed acquisition strategies, but generate enormous amounts of cash. He thinks that will fuel bigger rallies in the stocks.

The largest position in the portfolio at the end of 2019 was Bausch Health, formerly known as Valeant Pharmaceuticals. Valeant stock cratered in the wake of drug pricing controversies and a huge pile of debt. Since Miller bought the stock three years ago it's doubled in value, but it's still down 90% over the past five years.

Meanwhile Teva, discussed previously, made "some of the worst acquisitions in history" according to Miller, and its stock has fallen from over $70 in mid-2015 to about $10 a share today. He says Teva has a strong new management team and thinks it will climb as Wall Street watches the turnaround work.

(4) Rebound opportunities

Miller is also a believer in online luxury goods retailer Farfetch. After a much-hyped debut, the stock plunged from $28 in March 2019 to as little as $8 last fall. He says he invested at that time, and the stock has now risen to around $12.

"They're going to start generating cash, we think, in 2021," he said. "The nature of those online businesses is there'll be a massively cash generative over time."

And while Miller would rather invest in companies that are supported by positive economic trends and aren't suffering secular declines, he says he's found an exception in the news media, which he's long avoided.

"We own some Gannett, the newspaper company," he said. "It's down now around two times, two times cash flow. And the business does generate cash. So you you can get effectively all your money back in probably two to three years, even if the business declines from here."