Last week, the Opportunity Equity strategy gained 1.51%, outperforming the S&P 500’s -0.73% decline (Exhibit 1). The strategy ended the week up 21.60% YTD, 965 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 11/20/201
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (11/13 - 11/20) | 1.51% | -0.73% |
| MTD | 19.44% | 8.94% |
| QTD | 18.92% | 6.04% |
| YTD | 21.60% | 11.95% |
| Inception (annualized since 6/26/00) | 8.17% | 6.54% |
Source: Bloomberg, Miller Value Partners
Energy Transfer LP (ET) rose above the 50 and 100-day moving average. RBC lowered their price target to $9 from $10 (upside of 48%). Discovery Inc. (DISCA) rallied on news that the company plans to launch a global streaming service. The company will hold a presentation at the beginning of next month to outline their plans for the new venture. Alibaba Group Holdings Ltd. (BABA) partially bounced back after the market gauged that it may have overreacted slightly to the news last week that Chinese regulators are putting new rules in place to limit the power of tech giants in the country. Taylor Morrison Home Corp (TMHC) crossed above the 50-day moving average on positive housing data. October housing starts of 4.9% came in above estimates for a 3.2% gain, while August/September starts were revised +29k higherl. Single-family starts lead the way up 6.4% while multi-family starts were flat. DXC Technology Company (DXC) rose on relatively sparse news.
Exhibit 2: Significant Contributors to Performance, 11/13/20 - 11/20/20
| Name | Type | Return |
| DXC Technology Company | Equity | 4.6% |
| Energy Transfer LP | Equity | 12.3% |
| Discovery Inc - A | Equity | 10.3% |
| Alibaba Group Holding Ltd. ADS | Equity | 3.8% |
| Taylor Morrison Home Corp | Equity | 4.8% |
Source: Miller Value Partners
OneMain Holdings Inc. (OMF) fell as the October credit data showed net-charges-offs continued to be strong with total consolidated NCOs down 21% YoY despite +30 day delinquencies increasing 11% YoY. The average net loss rate on personal loans was 4.06% which was +23bps MoM but still down +268bps YoY with the direct auto loans having an annualized loss rate of 1.27% down -18bps MoM and -94bps YoY. CVS Health Corp (CVS) fell sharply on news that Amazon.com plans to sell prescription drugs in the US to Prime customers. The news comes two years after Amazon.com first made noise that they might be entering the space, and hit valuations across the industry. Rocket Companies Inc. (RKT) dropped below the 50-day moving average on limited news. Workday Inc. (WDAY) fell below the 50-day moving average despite beating estimates on both revenue and profitability in the quarter. Subscription revenue came in $969M vs expectations of $951M with non-GAAP operating margins of 24.2% above guidance of 19% leading to adjusted EPS of $0.86 vs $0.67 estimated. The stock fell despite the solid earnings as the company issued weaker than expected guidance for the fourth quarter. Workday guided for 4Q subscription revenue backlog growth of 14-16% vs 20% so far this year due to more difficult prior year comparison alongside ongoing macro uncertainty and the timing of upcoming renewals. The company increased full-year subscription revenue to $3.77B-$3.78B (22% YoY) vs. estimates of $3.74bn while also raising their non-GAAP operating margin guidance to 19% up from 18% previously.
Exhibit 3: Significant Detractors from Performance, 11/13/20 - 11/20/20
| Name | Type | Return |
| OneMain Holdings Inc. | Equity | -4.6% |
| CVS C60 1/23 | Derivative | -14.9% |
| *New Security* | Equity | -8.3% |
| Rocket Companies, Inc. | Equity | -4.1% |
| Workday Inc. | Equity | -5.7% |
Source: Miller Value Partners
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.
©2019 Miller Value Partners, LLC
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