Last week, the Opportunity Equity strategy gained 3.50%, outperforming the S&P 500’s -1.96% increase (Exhibit 1). The strategy ended the week up 12.33% YTD, 997 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 1/22/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (1/15 - 1/22) | 3.50% | 1.96% |
| MTD | 12.33% | 2.36% |
| QTD | 12.33% | 2.36% |
| YTD | 12.33% | 2.36% |
| Inception (annualized since 6/26/00) | 9.42% | 6.90% |
Source: Bloomberg, Miller Value Partners
Stitch Fix, Inc. (SFIX) rose as Keybanc Capital raised their stock price target from $65 to $95 (downside of 2%), as the strong market for online retail stocks continues to run. Taylor Morrison Home Corp (TMHC) posted a strong week as the company surged through the 50-day and 100-day moving average. December total housing starts rose 5.8% sequentially to 1,669k ahead of expectations for 0.8% rise to 1,560k which was led by single-family starts up 12% to 1,338k (27.8% YoY) with multi-family starts falling 13.6% to 331k. December total building permits rose 4.5% sequentially to 1,709k solidly above the Street’s outlook for a 1.7% decline to 1,608k led again by single-family permits up 7.8% to 1,226k (30.4% YoY) with multi-family permits down 3% to 483k. Precigen Inc. (PGEN) rose as the company raised $112.5m in new capital selling 15mm additional shares at $7.50. The new capital will be used to rapidly accelerate their UltraCAR-T program into the clinic. Farfetch Ltd. (FTCH) gained in sympathy with Richemont who announced FY3Q sales that were up 5% YoY ahead of consensus for 1% supported by mainland China which showed growth of 80%. The company received multiple price target increases with Morgan Stanley increasing their price target to $70 (11% upside), UBS moving their price target $77 (upside of 22.2%) and Keybanc increased their price target to $75 (upside of 19%). Stifel initiated on Desktop Metal Inc. (DM) with a buy rating and a price target of $30 (upside of 19.8%). The company announced the acquisition of EnvisionTEC Inc. for $300M in a cash and stock deal expected to close in March.
Exhibit 2: Significant Contributors to Performance, 1/15/21 - 1/22/21
| Name | Type | Return |
| Stitch Fix, Inc. | Equity | 31.1% |
| Taylor Morrison Home Corp | Equity | 22.3% |
| Precigen Inc. | Equity | 19.7% |
| Farfetch Ltd | Equity | 8.6% |
| Desktop Metal Inc. | Equity | 5.5% |
Source: Miller Value Partners
OneMain Holdings Inc. (OMF) released December Trust data that indicates that 4Q losses are in-line with consensus expectations. Personal loans net loss rate was 3.95%, up 40bps MoM in December compared to the 48bps decrease MoM in November. Total 30+ day delinquencies in the trusts were 3.53%, up 25bps MoM. In direct autos, the company reported $1.4M of losses in December, an annualized loss rate of 1.44% with delinquency at 1.98% in December, up 10bps MoM. JPM increasing their price target from $47 to $61 (upside of 21.4%). Flexion Therapeutics (FLXN) fell through the 50-day, 100-day, and 200-day moving average despite HC Wainwright maintaining a buy rating on the stock with a price target of $25 (upside of 116.6%). Energy Transfer LP (ET)) declined as people speculated that the company’s Dakota Access Pipeline is at greater risk of an extended shutdown with Biden in office. Capital One Financial Corp (COF) announced a $290M payment to the US Treasury Department to resolve an investigation of the bank’s anti-money-laundering program. JPMorgan increased their price target for the stock to $135 from $89 (upside of 18.2%) while Oppenheimer increased their price target from $105 to $130 (upside of 23.4%) citing a massive amount of excess capital. Uber Technologies (UBER) entered into an agreement with Aurora governing how the parties will use Aurora’s autonomous vehicles on Uber’s network. Uber recently sold their self-driving car unit to Aurora in the 4th quarter of 2020 leaving them with a 26% ownership stake in Aurora. Aurora announced a new partnership with PACCAR to develop and commercialize autonomous trucks for use in freight transportation.
Exhibit 3: Significant Detractors from Performance, 1/15/21 - 1/22/21
| Name | Type | Return |
| OneMain Holdings Inc. | Equity | -7.7% |
| Flexion Therapeutics. | Equity | -11.6% |
| Energy Transfer LP | Equity | -7.3% |
| Capital One Financial Corp | Equity | -6.4% |
| Uber C32 1/22 | Derivative | -4.9% |
Source: Miller Value Partners
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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.
©2020 Miller Value Partners, LLC
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