Last week, the Opportunity Equity strategy gained 6.45%, outperforming the S&P 500’s 2.45% rise (Exhibit 1). The strategy ended the week up 12.74% YTD, or 929 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 11/2/181
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (10/26 - 11/2) | 6.45% | 2.45% |
| MTD | 3.73% | 0.43% |
| QTD | -8.52% | -6.44% |
| YTD | 12.74% | 3.45% |
| Inception (annualized since 6/26/00) | 7.53% | 5.51% |
Source: Bloomberg, Miller Value Partners
RH (RH) rose above the 200-day moving average. NXP Semiconductors Inc. (NXPI) gained over the week after announcing 3Q results that beat consensus. The company reported revenue of $2,445M versus $2,419M expected and EPS of $2.01 vs. consensus of $1.90 along with a sizeable buyback. The Q4 guidance was roughly in-line on revenue and ahead on EPS with revenue of $2,390M (vs. $2,404M) and EPS of $2.08 (vs. $1.90). Share count was guided meaningfully below the street at 295M shares for 4Q, 30M shares below consensus. Genworth Financial Inc. (GNW) crossed above the 200-day moving average after announcing third quarter results and the scheduling of the public hearing with Delaware’s Department of Insurance regarding the company’s proposed transaction with China Oceanwide Holdings Group. The company stated that they are targeting closing the transaction by year-end. GNW reported EPS of $0.29 ahead of consensus of $0.26. Teva Pharmaceuticals (TEVA) crossed above the 50 and 200-day moving average after announcing strong 3Q results. Revenue came in at $4.53B slightly below consensus of $4.55B and EPS came in at $0.68, ahead of expectations of $0.55 due to lower operational spending. The company raised full year guidance to revenues of $18.6-19.0B up from $18.5-19.0B, EBITDA of $5.2-5.4B from $5.0-5.3B and EPS of $2.80-2.95 from $2.55-2.80. Newell Brands Inc. (NWL) gained over the week after reporting 3Q results which showed sequential improvement. The company reported core EPS of $0.81 compared to consensus of $0.65 with better gross margins than expected (down 10bps) and core sales down -4% compared to -10.2% in 2Q. The company raised full year guidance to EPS of $2.55-2.75 up from $2.45-2.65.
Exhibit 2: Significant Contributors to Performance, 10/26/18 - 11/2/18
| Name | Type | Return |
| RH | Equity | 12.4% |
| NXP Semiconductors Inc. | Equity | 18.5% |
| Genworth Financial Inc. | Equity | 15.2% |
| Teva Pharmaceutical | Equity | 14.7% |
| Newell Brands Inc. | Equity | 21.5% |
Source: Miller Value Partners
Allergan (AGN) crossed below the 200-day moving average after announcing strong 3Q results and raising guidance. The company had revenue of $3.91B and adjusted EPS of $4.25 compared to expectations of $3.89B and $4.03, respectively. Management raised 2018 guidance to revenues of $15.55-15.7B up from $15.45-15.6B and adjusted EPS of $16.20-16.60 from $16.00-16.50 but this implies softness in 4Q. The company has not made progress on selling their anti-infective and women’s health businesses but will provide an update in 4Q. There was minimal news on Flexion Therapeutics (FLXN), GTY Technology Holdings Inc. (GTYHU) and Quotient Technology Inc. (QUOT).
Exhibit 3: Significant Detractors from Performance, 10/26/18 - 11/2/18
| Name | Type | Return |
| Allergan PLC | Equity | -8.0% |
| Flexion Therapeutics | Equity | -1.3% |
| Cash | Cash | 0.0% |
| GTY Technology Holdings Inc. | Equity | 0.0% |
| Quotient Technology Inc. | Equity | 0.7% |
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.
©2018 Miller Value Partners, LLC
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