Last week, the Opportunity Equity gained 2.72%, outperforming the S&P 500’s 0.16% rise (Exhibit 1). The strategy ended the week up 4.15% YTD, or 139 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Versus Equity Indices, Through 2/3/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (1/27 - 2/3) | 2.72% | 0.16% |
| MTD | 4.04% | 0.85% |
| QTD | 4.15% | 2.76% |
| YTD | 4.15% | 2.76% |
| Inception (annualized since 12/30/99) | 6.26% | 4.67% |
Source: Bloomberg, Miller Value Partners
Apple Inc. (AAPL) was a top contributor for the week after releasing strong first quarter results. AAPL beat on both revenues and EPS reporting sales of $78.35B vs. consensus of $77.4B and EPS of $3.36 vs. consensus of $3.23 while iPhone unit sales grew 4.7% yoy. Ziopharm Oncology Inc. (ZIOP) passed above the 200-day, 100-day and 50-day moving average last week. BlackRock Inc. increased their position in ZIOP by +8% since the previous quarter and ZIOP announced improved production times utilizing its non-viral platform to engineer chimeric antigen receptor (CAR) – modified T cells in an ongoing Phase 1 study. Financial Review stated that Germany’s STADA Arzneimittel AG and UK-based Mundipharma International are preparing final bids for Valeant Pharmaceuticals’s (VRX) iNova Pharmaceuticals. There was minimal news on the other top contributors.
Exhibit 2: Significant Contributors to Performance, 1/27/17 - 2/3/17
| Name | Type | Return |
| Apple Inc C100 1/18 | Derivative | 24.4% |
| OneMain Holdings Inc. | Equity | 9.3% |
| MGIC Investment Corp | Equity | 8.0% |
| Ziopharm Oncology Inc. | Equity | 17.7% |
| Valeant Pharmaceuticals | Equity | 5.6% |
Source: LMM LLC.
American Airlines Group Inc. (AAL) announced the retirement of Art Torno, Senior VP of International and Cargo, in April. The airlines were down after Trump’s travel ban amid fears the ban will lead to more restrictions on flights. Taylor Morrison Home Corp. (TMHC) dropped below the 50-day moving average after reporting fourth quarter EPS of $0.65 versus consensus of $0.59 and revenue that beat estimates. The company also announced a 10M Class A share secondary offering, proceeds from which will be used to repurchase unlisted Class B shares held by TPG, Oaktree and JH Investments. This should improve Class A share liquidity. Delta Air Lines (DAL) dropped below the 50-day moving average following the grounding of all Delta flights due to a systems outage. This was followed later in the week with DAL reporting January passenger unit revenue (PRASM) was down 2.5% versus first quarter guidance of flat to up 2%. Amazon.com Inc. (AMZN) announced fourth quarter performance with revenue missing estimates while EPS beat. Amazon announced revenue of $43.7B versus consensus of $44.7B and EPS of $1.54 versus consensus of $1.36. Guidance for the first quarter disappointed investors with revenue and profit guidance coming in below consensus ($34.5B/$575M versus $36.0B/$1.3B). AWS sales also missed consensus with revenues growing 47% versus expectations of 50%. Endurance International Group Holdings (EIGI) announced the successful results of the exchange offer for the 10.875% Senior Notes due 2024. The company also announced the hiring of 600 employees at their Tempe office.
Exhibit 3: Significant Detractors from Performance, 1/27/17 - 2/3/17
| Name | Type | Return |
| American Airlines Group Inc. | Equity | -5.9% |
| Taylor Morrison Home Corp. | Equity | -10.8% |
| Delta Air Lines Inc. | Equity | -3.8% |
| Amazon.com Inc. | Equity | -3.1% |
| Endurance International Group Holdings | Equity | -3.1% |
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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