Last week, the Opportunity Equity Strategy gained 1.99%, outperforming the S&P 500’s 1.76% rise (Exhibit 1). The strategy ended the week up 1.99% YTD, or 23 basis points ahead the S&P 500.
Exhibit 1: Preliminary Performance of LMM Opportunity Equity Strategy Versus Equity Indices, Through 1/6/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (12/30 - 1/6) | 1.99% | 1.76% |
| MTD | 1.99% | 1.76% |
| QTD | 1.99% | 1.76% |
| YTD | 1.99% | 1.76% |
| Inception (annualized since 12/30/99) | 6.16% | 4.63% |
Source: Bloomberg, LMM
Intrexon Corp. (XON) formed a golden-cross pattern last week when the 50-day moving average rose above the 200-day. Also, Fibrocell Science (FCSC) which has a collaboration with Intrexon announced it had been granted the Fast Track designation for its FCX-007 treatment for Recessive Dystrophic Epidermolysis Bullosa (RDEB). Amazon.com Inc. (AMZN) rose above its 50-day and 100-day moving averages after announcing the Fulfillment by Amazon (FBA) service delivered over 2B items for Marketplace sellers in 2016 setting a new record. Amazon also benefited from a positive showing at this year’s CES with Alexa integrated in multiple third party products. OneMain Financial (OMF) received an unsolicited exchange offer from IEG Holdings Inc. which was unanimously rejected by the Board of Directors which stated that the offer was “grossly inadequate and reckless”. Apple Inc. (AAPL) announced that the App store had its busiest day ever on January 1st with $240M in purchases and had a record breaking year in 2016 with annual sales over $20B; however, the company missed its annual sales target for the first time since 2009. Valeant Pharmaceuticals International appointed Richard DeSchutter to the Board of Directors and Piper Jaffray lowered its price target from $16 to $11.
Exhibit 2: Significant Contributors to Performance, 12/30/16 - 1/6/17
| Name | Type | Return |
| Intrexon Corp | Equity | 8.6% |
| Amazon.com Inc | Equity | 6.2% |
| OneMain Holdings Inc. | Equity | 6.4% |
| Apple Call Options | Derivatives | 6.3% |
| Valeant Pharmaceuticals International | Equity | 5.3% |
Source: LMM LLC.
Endurance International Group (EIGI) declined last week after Goldman Sachs downgraded the stock to Sell with a price target of $7. Later in the week, the stock moved back above the 50-day and 100-day moving averages despite Kenneth Surdan, VP of Product, selling 16,762 shares. Pandora Media Inc. (P) was down after David Frear, CFO of Sirius XM, downplayed rumors of a possible acquisition. United Continental Holdings (UAL) was downgraded by Morgan Stanley to equal-weight from overweight while also being downgraded at Cowen to market perform. There was minimal news on GameStop (GME).
Exhibit 3: Significant Detractors from Performance, 12/30/16 - 1/6/17
| Name | Type | Return |
| Endurance International Group | Equity | -11.8% |
| Pandora Media Inc. | Equity | -4.4% |
| *Recently Added Security* | Equity | -5.2% |
| United Continental Holdings | Equity | -2.1% |
| Gamestop Corp | Equity | -2.9% |
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.
©2017 LMM LLC. LMM LLC is owned by Bill Miller and Legg Mason, Inc.
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