Last week, the LMM Opportunity Equity strategy lost -2.18%, underperforming the S&P 500’s -0.91% decline (Exhibit 1). The strategy ended the week down -1.43% YTD, or 1,088 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of LMM Opportunity Equity Strategy Versus Equity Indices, Through 12/2/161
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (11/25 - 12/2) | -2.18% | -0.91% |
| MTD | -0.90% | -0.31% |
| QTD | -0.38% | 1.50% |
| YTD | -1.43% | 9.45% |
| Inception (annualized since 12/30/99) | 5.93% | 15.73% |
Source: Bloomberg, LMM
Music streaming firm Pandora Media Inc. (P) was a top contributor as speculation surfaced of potential M&A with SiriusXM (SIRI). Financials comprised three of last week’s top five contributors – JPMorgan Chase & Co (JPM/WS), Bank of America (BAC) and Nationstar Mortgage Holdings (NSM) - as they continued to benefit from a more optimistic post election outlook (less regulatory burden, higher rates and more robust U.S. GDP growth). Last week, Platform Specialty Products Corp (PAH) presented at Citi’s Basic Materials Conference and made optimistic comments about synergy targets.
Exhibit 2: Significant Contributors to Performance, 11/25/16 - 12/2/16
| Name | Type | Return |
| Pandora Media Inc. | Equity | 19.1% |
| JPMorgan Chase & Co. - Warrant | Warrant | 7.3% |
| Platform Specialty Products Corp | Equity | 5.9% |
| Bank of America Corp | Equity | 2.2% |
| Nationstar Mortgage Holdings | Equity | 3.8% |
Source: LMM LLC.
Valeant Pharmaceuticals (VRX) declined after news broke that talks to sell Salix to Takeda had broken down. There did not appear to be any price-moving news on any of the other detractors.
Exhibit 3: Significant Detractors from Performance, 11/25/16 - 12/2/16
| Name | Type | Return |
| Intrexon Corp | Equity | -10.2% |
| Valeant Pharmaceuticals Intl Inc. | Equity | -9.1% |
| Endurance International Group Holdings | Equity | -10.2% |
| Apple Call Options | Derivative | -8.2% |
| Genworth Financial Inc. | Equity | -5.4% |
Source: LMM LLC.
1The performance figures reflect the deduction of a model investment management fee of 1% (the highest fee for separate accounts under our fee schedule) and certain other expenses. For important additional information about Opportunity Equity performance, please click on the Opportunity Equity Composite Performance Disclosure. The performance returns shown in this report are preliminary and are subject to revision. Past performance is no guarantee of future results.
Significant Contributors and Significant Detractors are the Strategy holdings that had the greatest effect on Strategy performance for the week. Holdings that have been in the Strategy since the end of the most recent calendar quarter are identified by name. For information on how Contributor/Detractor data were calculated and a list showing the contribution to the Strategy's weekly performance of each investment held at such quarter end, contact LMM.
Any views expressed are subject to change at any time, and LMM 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, and there is no guarantee dividends will be paid or continued.
©2016 LMM LLC. LMM LLC is owned by Bill Miller and Legg Mason, Inc.
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