Last week, the Opportunity Equity gained 7.48%, outperforming the S&P 500’s 3.13% advance (Exhibit 1). The strategy ended the week up 5.94% YTD, or 693 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of LMM Opportunity Equity Strategy Versus Equity Indices, Through 12/9/161
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (12/2 - 12/9) | 7.48% | 3.13% |
| MTD | 6.52% | 2.81% |
| QTD | 7.07% | 4.67% |
| YTD | 5.94% | 12.87% |
| Inception (annualized since 12/30/99) | 6.38% | 4.60% |
Source: Bloomberg, LMM
Apple Inc. (AAPL) Call Options were a top contributor as Tim Cook announced that Apple Watch was having its best quarter ever. Financials comprised two of last week’s top five contributors – OneMain Holdings Inc. (OMF) and JPMorgan Chase & Co (JPM/WS) - as they benefitted from expectations of a rate increase in December and less regulation with the new administration. Endurance International Group Holdings (EIGI) climbed last week after it announced its collaboration with Google to bring G Suite (formerly Google Apps for Work) to small businesses through its ResellerClub platform. Last week, United Continental Holdings (UAL) released its November traffic showing November consolidated traffic up 1.7% YoY and announced improved guidance for fourth-quarter PRASM of -3 to -4% versus the prior -4 to -6% guidance.
Exhibit 2: Significant Contributors to Performance, 12/2/16 - 12/9/16
| Name | Type | Return |
| Apple Call Options | Derivative | 19.0% |
| OneMain Holdings Inc. | Equity | 15.4% |
| Endurance International Group Holdings | Equity | 18.2% |
| JPMorgan Chase & Co - Warrants | Warrant | 9.4% |
| United Continental Holdings | Equity | 8.5% |
Source: LMM LLC.
There were two positions that declined in value last week (Exhibit 3). Endo Pharmaceuticals Holdings (ENDP) along with other biotech companies declined after Trump stated that he would bring down drug prices.
Exhibit 3: Significant Detractors from Performance, 12/2/16 - 12/9/16
| Name | Type | Return |
| *Recently Added Security* | Equity | -8.8% |
| Endo Pharmaceuticals Holdings | Equity | -0.8% |
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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