Last week, the Opportunity Equity strategy lost 0.35%, underperforming the S&P 500’s 0.71% rise (Exhibit 1). The strategy ended the week up 10.13% YTD, or 328 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Versus Equity Indices, Through 3/3/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (2/24 - 3/3) | -0.35% | 0.71% |
| MTD | 0.42% | 0.85% |
| QTD | 10.13% | 6.85% |
| YTD | 10.13% | 6.85% |
| Inception (annualized since 12/30/99) | 6.58% | 4.89% |
Source: Bloomberg, Miller Value Partners
Apple Inc. (AAPL) was a top contributor for the week after Warren Buffett disclosed that Berkshire Hathaway Inc. doubled its stake in Apple in early January. Both Citi and BTIG raised their price targets to $160 and $165, respectively. JPMorgan Chase & Co. (JPM/WS) held their investor day last week providing an optimistic outlook of 10% core loan growth, expectations of higher rates, a benign credit outlook and expense control, but maintaining the targets for return on equity and return of capital. Both JPMorgan Chase & Co and Bank of America (BAC) benefited from expectations of a Fed rate hike in March. Intrexon Corp. (XON) released fourth quarter results which were below consensus with revenues of $46M vs. consensus of $53M and non-GAAP EPS of -$0.37 versus consensus of -$0.24. The company announced meaningful advances in the development of its Oxitec, Okanagan and AquaBounty businesses. There was minimal news on Lennar Corp. (LEN).
Exhibit 2: Significant Contributors to Performance, 2/24/17 - 3/3/17
| Name | Type | Return |
| Apple Inc. C100 1/18 | Derivatives | 9.2% |
| JPMorgan Chase & Co - Warrants | Derivatives | 5.6% |
| Bank of America | Equity | 5.3% |
| Lennar Corp. | Equity | 5.2% |
| Intrexon Corp. | Equity | 4.6% |
Source: Miller Value Partners
Valeant Pharmaceuticals International Inc. (VRX) fell below the 50-day moving average after reporting fourth quarter results which beat consensus with revenues of $2.4B versus consensus of $2.34B and EPS of $1.26 versus consensus of $1.20. Analysts were disappointed with the 2017 guidance that showed revenues of $8.9-9.1B (consensus of $8.98B) and adjusted EBITDA of $3.55-3.70B (consensus of $3.88B). Endurance International Group Inc. (EIGI) announced that Ronald LaSalvia has resigned from the role of President and Chief Operating Officer but will remain with the Company in a senior leadership role. The stock crossed below the 50-day, 100-day and 200-day moving average. Endo Pharmaceuticals Holdings Inc. (ENDP) was up after releasing fourth quarter results which were ahead of expectations but then reversed and declined as concerns about their cash flow and leverage situation grew. Fourth quarter revenue of $1.24B was ahead of consensus of $1.16B and adjusted EPS of $1.77 beat consensus of $1.63. Management guided for 2017 revenue to be $3.45-$3.6B compared to consensus of $3.7B and adjusted EPS of $3.45-3.75 was far below consensus of $4.29. Pandora Media Inc. (P) appointed former TiVo executive, Naveen Chopra, as CFO. There was minimal news on Quotient Technology Inc. (QUOT).
Exhibit 3: Significant Detractors from Performance, 2/24/17 - 3/3/17
| Name | Type | Return |
| Valeant Pharmaceuticals International Inc. | Equity | -19.3% |
| Endurance International Group Inc. | Equity | -13.0% |
| Quotient Technology Inc. | Equity | -10.6% |
| Endo Pharmaceuticals Holdings Inc. | Equity | -6.8% |
| Pandora Media | Equity | -4.1% |
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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