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Feb 01, 2021

Opportunity Equity Update for Week Ended 1/29/21

Christina Siegel Malbon

Rocket Rises on New National Mortgage Broker Directory, While Taylor Morrison Falls on Disappointing December New Home Sales

Last week, the Opportunity Equity strategy slid -3.85%, underperforming the S&P 500’s -3.29% decrease (Exhibit 1). The strategy ended the week up 8.00% YTD, 901 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 1/29/211

Time Period Opportunity Equity S&P 500
Last Week (1/22 - 1/29) -3.85% -3.29%
MTD 8.00% -1.01%
QTD 8.00% -1.01%
YTD 8.00% -1.01%
Inception (annualized since 6/26/00) 9.20% 6.72%

Source: Bloomberg, Miller Value Partners

WW International Inc. (WW) jumped above the 100-day and 200-day moving averages while Rocket Companies, Inc. (RKT) rose through the 50-day and 100-day moving averages. Rocket announced the launch of a national mortgage broker directory allowing customers looking to refinance to do so any way they prefer, even through a local broker. Canada Goose Holdings (GOOS) climbed through the 50-day moving average as Williams initiated coverage at C$40 (downside of 6.6%) with a hold rating on the stock.  Flexion Therapeutics (FLXN) popped through the 50-day, 100-day, and 200-day moving averages. Wells Fargo dropped their price target to $15 from $16 (upside of 31.5%) on more conservative Zilretta projections. There was limited news on Discover Inc. (DISCA).

Exhibit 2: Significant Contributors to Performance, 1/22/21 - 1/29/21

Name Type Return
Discover Inc. Equity 10.5%
WW International Inc Equity 8.8%
Rocket Companies, Inc. Equity 6.5%
Canada Goose Holdings Equity 4.6%
Flexion Therapeutics Equity 5.5%

Source: Miller Value Partners

Taylor Morrison Home Corp (TMHC) fell through the 50-day moving average. December new home sales rose 1.6% sequentially to 842k below the Street’s outlook for a 3.5% rise to 870k. On a YoY basis, December rose 15.2% below November and October’s growth of 19.1% and 34.4%, respectively. Keybanc raised their price target on The RealReal (REAL) to $32 up from $21, upside of 35%. Uber Technologies (UBER) dropped below the 50-day moving average on limited news. JPMorgan adjusted their price target from $63 to $64 (upside of 25.7%), while Wells Fargo increased their price target from $60 to $65 (upside of 27.6%). The company announced that they have begun delivering prescriptions in New York City with Nimble.  Diamondback Energy Inc. (FANG) fell despite limited exposure to President Biden’s ban on new drilling on federal acreage. Raymond James moved their price target from $55 to $91 (upside of 60.5%) and gave the stock a strong buy rating. There was limited news on Desktop Metal Inc. (DM).

Exhibit 3: Significant Detractors from Performance, 1/22/21 - 1/29/21

Name Type Return
Desktop Metal Inc. Equity -8.3%
Taylor Morrison Home Corp Equity -14.4%
The RealReal, Inc. Equity -13.2%
Uber C32 1/22 Derivative -11.3%
Diamondback Energy Inc. Equity -11.1%

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.

©2020 Miller Value Partners, LLC