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Nov 01, 2021

Opportunity Equity Update for Week Ended 10/29/21

Christina Siegel Malbon

Matterport Gains on Wedbush Recommendation while Teva Falls on Earnings

Last week, the Opportunity Equity strategy fell 2.16%, underperforming the S&P 500’s 1.35% return. (Exhibit 1). The strategy ended the week up 6.61% YTD, 1,743 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 10/29/211

Time Period Opportunity Equity S&P 500
Last Week (10/22 - 10/29) -2.16% 1.35%
MTD 2.08% 7.01%
QTD 2.08% 7.01%
YTD 6.61% 24.04%
Inception (annualized since 6/26/00) 8.80% 7.61%

Source: Bloomberg, Miller Value Partners

Matterport Inc. (MTTR) crossed its 50-day moving average after Wedbush Securities added the company to its “best ideas” list and highlighted it as a “Core Metaverse Play.” Alphabet Inc (GOOGL) crossed above its 50-day moving average on robust Q3 earnings. The company reported revenue of $65.1B, 3% above consensus with EBIT margins hitting 32.3% well above Street expectations at 28.3%. This lead to EPS of $27.99 beating consensus of $23.12. Taylor Morrison Home Corp (TMHC) crossed above its 200-day moving averages on solid Q3 earnings. The company reported orders of 3,372 vs consensus expectations of 3,265 with homebuilding revenue coming in at $1.77B vs $1.73B expected while gross margins ex-charges came in at 21.2% ahead of consensus of 20.3% leading to EPS of $1.34 vs $1.20 expected. The company expects gross margins and community could to continue to increase in FY22. Lou Steffens was named as successor to current CFO Dave Cone who is set to retire at the end of calendar 2021. The RealReal, Inc. (REAL) rose above the 50-day moving average as Raymond James upgraded the stock to an Outperform rating and a price target of $19, upside of 46%.

Exhibit 2: Significant Contributors to Performance, 10/22/21 - 10/29/21

Name Type Return
Matterport Inc. Equity 16.1%
Alphabet Inc Equity 7.6%
Taylor Morrison Home Corp Equity 9.6%
*New Security* Equity 6.2%
The RealReal, Inc. Equity 5.2%

Source: Miller Value Partners

Teva Pharmaceuticals (TEVA) fell below the 50, and 100-day moving average after reporting 3Q results. The company reported revenue of $3.89B, slightly below consensus of $4.03B driven by lower revenue in North America. EBITDA came in at $1.17B came in below consensus of $1.24B leading to EPS of $0.59 vs $0.64 expected. The company reaffirmed its FY21 guidance at the midpoint with revenue of $16.2B, EBITDA of $4.95B, EPS of $2.60 and FCF of $2.15B. JD C75 1/19/24 (JD) decline over the week despite Mizuho raising their price target to $95 up from $85, upside of 21%. Meanwhile, Vertical Group downgraded JD and Alibaba Group Holdings Ltd. (BABA) to mixed citing limited demand from abroad, economic uncertainty and power curtailments that are impacting production giving little hope to ecommerce sales recovery by the end of the year. TLT P140 1/20/23 (TLT) declined over the week as long-date rates fell. Green Thumb Industries (GTBIF) fell on limited news.

Exhibit 3: Significant Detractors from Performance, 10/22/21 - 10/29/21

Name Type Return
Teva Pharmaceutical-SP ADR Equity -13.7%
JD 1/24 C75 Derivative -14.8%
TLT 1/23 P140 Derivative -16.0%
Green Thumb Industries Inc. Equity -11.9%
Alibaba Group Holding Ltd. ADS Equity -7.2%

-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.

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