Last week, the Opportunity Equity strategy lost 0.40%, underperforming the S&P 500’s 0.73% rise (Exhibit 1). The strategy ended the week up 10.51% YTD, or 442 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Versus Equity Indices, Through 2/24/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (2/17 - 2/24) | -0.40% | 0.73% |
| MTD | 10.40% | 4.12% |
| QTD | 10.51% | 6.09% |
| YTD | 10.51% | 6.09% |
| Inception (annualized since 12/30/99) | 6.61% | 4.85% |
Source: Bloomberg, Miller Value Partners
RH (RH) was a top contributor for the week after pre-announcing preliminary fourth quarter results. RH announced fourth quarter adjusted EPS of $0.68 versus consensus of $0.65 and revenues of $590M, on the high end of company guidance of $562M-$592M. The company also announced the authorization of a $300M stock repurchase program (23% of the current market cap) leading the stock to cross above the 50-day, 100-day and 200-day moving average. Lennar Corp (LEN) and Pulte Group Inc. (PHM) were up over the week despite limited individual news but moving in sympathy with other homebuilders after TOL’s strong earnings release. January new home sales increased 5.5% YoY to 555K, below consensus of 575K and existing home sales rose 4% YoY to 5.69M, the highest reading since February 2007. Gamestop Corp. (GME) crossed above the 200-day moving average on no real news. There was minimal news on the Genworth Financial (GNW).
Exhibit 2: Significant Contributors to Performance, 2/17/17 - 2/24/17
| Name | Type | Return |
| RH | Equity | 17.0% |
| Lennar Corp | Equity | 2.1% |
| Genworth Financial Inc. | Equity | 1.8% |
| Pulte Group Inc. | Equity | 1.5% |
| GameStop Corp. | Equity | 2.8% |
Source: Miller Value Partners
Ziopharm Oncology Inc. (ZIOP) reported fourth quarter results the week before with EPS coming in line at -$0.11 and $81.1M in cash which should get them through 4Q17. The company has five Phase I trials beginning in 2017. Quotient Technology Inc. (QUOT) declined over the week with Mir Aamir, CFO, selling 34.6K shares reducing his shares held by 9%. Platform Specialty Products Corp. (PAH) is said to be considering splitting the company into separate agriculture and specialty chemical businesses. Endurance International Group Inc. (EIGI) was downgraded to underweight at Morgan Stanley, which sees underestimated headwinds for 2017 and gives the company’s stock a price target of $8.50, 8% below where it closed Friday. There was minimal news on Intrexon Corp. (XON).
Exhibit 3: Significant Detractors from Performance, 2/17/17 - 2/24/17
| Name | Type | Return |
| Intrexon Corp. | Equity | -6.5% |
| Ziopharm Oncology Inc. | Equity | -11.1% |
| Quotient Technology Inc. | Equity | -4.7% |
| Platform Specialty Products | Equity | -2.3% |
| Endurance International Group Inc. | Equity | -3.2% |
Source: Miller Value Partners
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 us.
Any views expressed are subject to change at any time, 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, and there is no guarantee dividends will be paid or continued.
©2017 Miller Value Partners
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