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Jan 31, 2022

Opportunity Equity Update for Week Ended 1/28/22

Christina Siegel Malbon

Diamondback Energy Rises on Higher Energy Prices While Alibaba Falls on Price Target Reductions

Last week, the Opportunity Equity strategy lost -1.51%, underperforming the S&P 500’s 0.79% gain. (Exhibit 1). The strategy ended the week down -9.56% YTD, 263 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 1/28/221

Time Period Opportunity Equity S&P 500
Last Week (1/21 - 1/28) -1.51% 0.79%
MTD -9.56% -6.93%
QTD -9.56% -6.93%
YTD -9.56% -6.93%
Inception (annualized since 6/26/00) 7.71% 7.34%

Source: Bloomberg, Miller Value Partners

Diamondback Energy (FANG) and Ovintiv Inc. (OVV) gained over the week as oil prices continued to reach new highs ending the week as Brent crossed above $90. Diamondback received a number of price target increases with Piper Sandler raising its price target to $142 from $131 (10.3% upside), Morgan Stanley raising their price target to $155 (20.4% upside), while Barclays raised their price target to $127 (-1.3% downside). Morgan Stanley maintained its “overweight” rating on Ovintiv Inc (OVV) but trimmed its price target to $49 from $52 (26% upside). Tivity Health Inc (TVTY) crossed its 100 and 200-day moving averages. The company named Stephanie Davis Michelman, most recently Vice President and General Manager of Bobbi Brown Cosmetics, to its board of directors. Mattel Inc (MAT) rose through its 200-day moving average. The company benefitted from the announcement that the Disney Princess collection license will return to the company beginning in 2023. There was limited news on Alphabet Inc (GOOGL).

Exhibit 2: Significant Contributors to Performance, 1/21/22 - 1/28/22

Name Type Return
Diamondback Energy Inc Equity 8.9%
Ovintiv Inc Equity 4.2%
Tivity Health Inc Equity 3.6%
Mattel Inc Equity 2.8%
Alphabet Inc Equity 2.3%

Source: Miller Value Partners

Alibaba Group Holding Ltd. ADS (BABA) received a number of price target reductions with Truist cutting its price target to $180 from $200 (56.2% upside), and Stifel cutting its price target from $170 to $150 (30.2% upside). Cowen cut its price target for Farfetch Ltd (FTCH) to $33 from $40 (68.8% upside). The company ended the week by announcing the acquisition of Violet Gray for an undisclosed sum, helping to propel its launch into beauty expected later this year. There was limited news on Green Thumb Industries Inc. (GTBIF), Inc (JD), and SoFi Technologies, Inc. (SOFI).

Exhibit 3: Significant Detractors from Performance, 1/21/22 - 1/28/22

Name Type Return
Green Thumb Industries Inc. Equity -10.6%
JD 1/24 C75 Derivative -14.1%
SoFi Technologies, Inc. Equity -20.1%
Alibaba Group Holding Ltd. ADS Equity -6.5%
Farfetch Ltd Equity -9.6%

-Source: Miller Value Partners

Check out the Income Strategy weekly Update. Click to Read.

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. Portfolio composition is shown as of a point in time and is subject to change without notice.

©2022 Miller Value Partners, LLC