Last week, the Opportunity Equity strategy lost -0.32%, underperforming the S&P 500’s 0.98% advance (Exhibit 1). The strategy ended the week down -0.86% YTD, or 199 basis points behind of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 1/10/201
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (1/3 - 1/10) | -0.32% | 0.98% |
| MTD | -0.86% | 1.13% |
| QTD | -0.86% | 1.13% |
| YTD | -0.86% | 1.13% |
| Inception (annualized since 6/26/00) | 7.41% | 6.29% |
Source: Bloomberg, Miller Value Partners
Lennar (LEN) moved above its 50 and 100-day moving averages after reporting strong results. EPS of $2.13 came in nicely ahead of consensus of $1.90, driven by better-than-expected homebuilding revenue (+8% Y/Y) and unit orders (+23% Y/Y). Management provided FY20 guidance, where they see closings of 54K-55K (+5%-7%), gross margins of 20.5%-21.0%, and for homebuilding free cash flow to continue to accelerate. Cowen raised their price target on Facebook (FB) to $245 (from $240), 11% implied upside from current levels reflecting slightly raised FY20 estimates. Intrexon’s Precigen unit announced that the US Food & Drug Administration has granted orphan drug designation to PRGN-3006, an investigational therapy using the company’s non-viral UltraCAR-T therapeutic platform for patients with relapsed or refractory acute myeloid leukemia (AML). Cowen upgraded Micron (MU) to “Outperform” and raised their price target to $70 (from $50), 23% above current levels, noting DRAM fundamentals may improve earlier-than-expected and in turn support the company’s improved cost position versus peers. There was no news on Tivity Health (TVTY).
Exhibit 2: Significant Contributors to Performance, 1/3/20 - 1/10/20
| Name | Type | Return |
| Tivity Health Inc | Equity | 12.5% |
| Lennar Corp | Equity | 5.8% |
| Facebook Inc | Equity | 4.5% |
| Intrexon Corp | Equity | 8.7% |
| Micron Technology Inc | Equity | 3.9% |
Source: Miller Value Partners
ADT Inc (ADT) announced the acquisition of Defenders, its largest dealer generating 50% of dealer-related revenue, for $381M in cash and stock. Management expects the deal to result in a more capital efficient model through the elimination of dealer margin and lower customer acquisition costs. The deal is expected to be beneficial to both FY20 operating and free cash flow. Further, the company rolled out Blue by ADT, a new do-it-yourself smart home security brand. Flexion (FLXN) preannounced Q4 Zilretta revenue of $23.7M, just below street estimates of $24.2M. Management also provided FY20 Zilretta guidance of $120M-$135M, bracketing consensus of $133M. Peloton (PTON), Bausch Health (BHC), and StichFix (SFIX) fell below closely watched technical levels.
Exhibit 3: Significant Detractors from Performance, 1/3/19 - 1/10/20
| Name | Type | Return |
| ADT Inc | Equity | -15.4% |
| Peloton Interactive, Inc. | Equity | -8.5% |
| Bausch Health Companies Inc | Equity | -6.0% |
| Stitch Fix, Inc. | Equity | -7.8% |
| Flexion Therapeutics | Equity | -3.8% |
Source: Miller Value Partners
1The performance figures reflect the results of a representative account net of management fee 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. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners.
©2019 Miller Value Partners, LLC
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