Last week, the Opportunity Equity strategy gained 1.29%, outperforming the S&P 500’s 0.83% return. (Exhibit 1). The strategy ended the week up 7.36% YTD, 1,087 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 10/8/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (10/1 - 10/8) | 1.29% | 0.83% |
| MTD | 2.80% | 1.99% |
| QTD | 2.80% | 1.99% |
| YTD | 7.36% | 18.23% |
| Inception (annualized since 6/26/00) | 8.86% | 7.38% |
Source: Bloomberg, Miller Value Partners
Diamondback Energy Inc. (FANG) gained as commodity prices continued to move higher. Alibaba Group Holdings Ltd. (BABA) gained as the U.S. and China agreed that President Joe Biden and President Xi Jinping would meet before the end of the year. Acuity Brands Inc. (AYI) rose through the 50-day and 100-day moving average after announcing 4Q21 earnings which beat expectations. The company reported adjusted EPS of $3.27 ahead of consensus of $2.85 on revenues of $992.7M vs $961.6M expected. The results were supported by continued momentum in demand recovery as well as the company’s ability to manage supply chain issues better than peers. The company provided fiscal year 2022 guidance expecting ABL to grow high single digits and ISG to grow mid-teens, which implies total revenue of ~$3.8B vs consensus of $3.7B. The company guided for gross margins to stay >42% despite supply chain pressure. Wells Fargo initiated on the name with an outperform rating and a price target of $218, upside of 11.5%. General Motors (GM) crossed above the 100 and 200-day moving average following their investor day. Cruise announced expectations for their ride hailing business to reach $50B in revenue over the next few years. The company laid out expectations for their core auto and financing business to grow at a 4-6% CAGR over the next 9 years reaching revenue between $195-235B by 2030 with their software and new business categories going from $2B today to $80B by 2030. Overall, company margins are expected to reach 12-14% by 2030.
Exhibit 2: Significant Contributors to Performance, 10/1/21 - 10/8/21
| Name | Type | Return |
| *New Security* | Derivative | 29.2% |
| Diamondback Energy Inc | Equity | 11.2% |
| Alibaba Group Holding Ltd. | Equity | 12.0% |
| Acuity Brands, Inc. | Equity | 16.7% |
| General Motors Co | Equity | 10.2% |
Source: Miller Value Partners
Norwegian Cruise Line Holdings (NCLH) fell below the 100 and 200-day moving average. The company expects to sail 75% of its ships by January 2022 and 100% by April. The RealReal Inc. (REAL) decline over the week despite releasing 3Q GMV results which came in at the high end of guidance reporting GMV of $367.9M, 44% YoY and 44% above 2019 levels. The company also announced a new partnership with Mytheresa. Facebook Inc. (FB) fell over the week following the testimony by ex-employee, Frances Haugen, to Congress claiming that Facebook knew about, but didn’t disclose, harmful impacts of its service and calling for regulation. There was minimal news on Green Thumb Industries Inc. (GTBIF) and Stitch Fix Inc. (SFIX).
Exhibit 3: Significant Detractors from Performance, 10/1/21 - 10/8/21
| Name | Type | Return |
| Stitch Fix, Inc. | Equity | -16.3% |
| Norwegian Cruise Line Holdings Ltd. | Equity | -6.9% |
| Green Thumb Industries Inc. | Equity | -8.3% |
| The RealReal, Inc. | Equity | -9.1% |
| Facebook Inc | Equity | -3.8% |
-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.
©2021 Miller Value Partners, LLC
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