Last week, the Opportunity Equity Strategy's representative account gained 5.50%, outperforming the S&P 500’s 1.47% rise. (Exhibit 1). The strategy ended the week up 5.50% YTD, 403 basis points ahead of the S&P 500.
Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 1/6/231
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (12/30 - 1/6) | 5.50% | 1.47% |
| MTD | 5.50% | 1.47% |
| QTD | 5.50% | 1.47% |
| YTD | 5.50% | 1.47% |
| 1 Year | -32.86% | -15.68% |
| 5 Year | 0.92% | 9.18% |
| 10 Year | 9.58% | 12.41% |
| Inception (annualized since 6/26/00) | 6.00% | 6.49% |
Source: Bloomberg, Miller Value Partners. Visit the Strategy page for Opportunity Equity performance through the most current month end period.
Alibaba Group Holding Limited (BABA) rose above the 200-day moving average after Chinese regulators approved a 10.5 billion yuan ($1.5B) capital raise for Ant Group, an affiliate company of Alibaba, sparking hope that the regulatory environment is improving. The raise will allow the company to revisit its IPO plans which were shelved in 2020.
Teva Pharmaceutical Industries Limited (TEVA) rose after Alvotech, the company’s biosimilar commercial partner, announced the FDA had accepted for review a biosimilar version of Johnson and Johnson’s STELERA arthritis medication with completion likely in 2H23. STELERA is an ~$8Bn market and the company is expected to launch the new product in 2024. Teva and other generic drug manufacturers were named in a patent infringement lawsuit in New Jersey District Court by Jazz Pharmaceuticals for filing an Abbreviated New Drug Application (ANDA) with the FDA for a generic version of Jazz’s seizure medication, EPIDIOLEX. Jazz claims that EPIDIOLEX has orphan drug exclusivity for seizures associated with Dravet syndrome in patients aged 2 and older through 2025, and Lennox-Gastaut syndrome in patients aged 1-2 through 2027. As a result, a 30-month stay of approval will be imposed on the applications, giving Jazz time to assert patent rights in court before a generic competitor is approved and can market the drug.
Mattel, Inc. (MAT) rose above the 100-day moving average. According to proprietary channel checks, UBS estimates that the company maintained market share in 4Q, while Hasbro lost market share. Stifel lowered its price target to $26 from $29 (31% upside).
Delta Air Lines, Inc. (DAL) rose above the 50 and 200-day moving averages. T-Mobile announced a partnership with Delta to bring free in-flight Wi-Fi to Delta SkyMiles Members effective February 1st. In an interview with Bloomberg, CEO Ed Bastian highlighted his expectation for a “very, very strong” year for travel in the United States in 2023. Argus upgraded Delta to buy from hold with a $39 price target (8% upside).
Bank of America re-instated coverage of Cleveland-Cliffs Inc. (CLF) with a neutral rating and a $19 price target (2% upside).
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 12/30/22 - 1/6/23
| Name | Type | Return |
| Alibaba Group Holding Limited | Equity | 21.9% |
| Teva Pharmaceutical Industries Limited | Equity | 15.4% |
| Mattel, Inc. | Equity | 11.6% |
| Delta Air Lines, Inc. | Equity | 9.6% |
| Cleveland-Cliffs Inc. | Equity | 15.8% |
Source: Miller Value Partners. See below for additional information.
Silvergate Capital Corporation (SI) fell after the company pre-announced worse than expected 4Q earnings results. The company pre-announced select 4Q metrics, with digital asset customer deposits falling to $3.8 billion in 4Q from $11.9B in 3Q 2022. The bank’s Silvergate Exchange Network “SEN” continues to operate 24/7 with average daily volume totaling $1.3 billion in 4Q, compared to average daily volume of $1.2 billion in 3Q 2022. All SEN Leverage loans have performed as expected with zero losses and no forced liquidations. The company announced a 40% headcount reduction in light of the bank’s smaller asset base and the more challenging macro environment. Silvergate also took a $196M impairment charge related to its Diem cryptocurrency purchased from Meta. Bank of America downgraded the name to underperform from neutral, lowering its price target to $8 from $37 (-35% downside), while Canaccord lowered its price target to $25 from $150 (104% upside).
Ovintiv Inc. (OVV) fell below the 200-day moving average, following commodity prices lower over the course of the week.
Coinbase Global, Inc. (COIN) fell in sympathy with the broader cryptocurrency sector. The company agreed to a $50M fine to settle allegations from the New York Department of Financial Services that it failed to adequately guard against money laundering on its platform. Coinbase also agreed to spend an additional $50M over the next two years to enhance its compliance program. Cowen downgraded the name to market perform from outperform, lowering its price target to $36 from $75 (8% upside).
Splunk Inc. (SPLK) fell on limited news.
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 12/30/22 - 1/6/23
| Name | Type | Return |
| Silvergate Capital Corporation | Equity | -29.7% |
| Ovintiv Inc. | Equity | -5.2% |
| *New Security* | Equity | -7.0% |
| Coinbase Global, Inc. | Equity | -6.0% |
| Splunk Inc. | Equity | -3.2% |
Source: Miller Value Partners. See below for additional information.
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As of prior week's market close unless otherwise stated.
1The performance figures for the representative Opportunity Equity account reflect the deduction investment management fees and certain other expenses. Returns greater than 1 year are annualized.
For additional information about Opportunity Equity Strategy performance, please click on the Opportunity Equity Strategy Composite Performance Disclosure. Past performance is no guarantee of future results.
2Significant Contributors and Detractors are based on holdings that had the greatest effect on representative account performance for the week. Holdings that have been in the portfolio since the end of the most recent calendar quarter are identified by name. Returns listed above represent the market performance of the individual security during the week, or for the partial period held in the portfolio during the week. 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. There is no guarantee that market trends discussed herein will continue. 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. References to specific securities are for illustrative purposes only. Portfolio composition is shown as of a point in time and is subject to change without notice. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners.
©2022 Miller Value Partners, LLC
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