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Jan 04, 2021

Opportunity Equity Update for Week Ended 12/31/20

Christina Siegel Malbon

Alibaba Rises on Stock Buyback Increase, while Taylor Morrison Falls on Housing Data

Last week, the Opportunity Equity strategy fell -1.80%, underperforming the S&P 500’s 1.45% gain (Exhibit 1). The strategy ended the week and year up 38.91% YTD, 2,051 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 12/31/201

Time Period Opportunity Equity S&P 500
Last Week (12/24 - 12/31) -1.80% 1.45%
MTD 9.85% 3.84%
QTD 35.85% 12.15%
YTD 38.91% 18.40%
Inception (annualized since 6/26/00) 8.83% 6.80%

Source: Bloomberg, Miller Value Partners

Alibaba (BABA) rose on the announcement of an increase in their share buyback program from $6bn to $10bn. The move comes as the stock has been under pressure from the Chinese government over perceived monopolistic practices. The program will be effective for two years through the end of 2022. The Ant Group, which Alibaba owns 33% of, is reportedly facing a probe as to whether their equity investments are breaching rules, part of the continuing challenges with regulators in the country. (AMZN) rose through the 100-day moving average as they acquired the podcast company Wondery for $300mm. Wells Fargo named OneMain Holdings Inc. (OMF) the top pick in small to midsized consumer finance for 2021 as he sees the potential for the company to outperform as the recovery from Covid-19 continues. DXC Technology Company (DXC) and Puretech Health PLC (PRTC) both rose on limited news.

Exhibit 2: Significant Contributors to Performance, 12/24/20 - 12/31/20

Name Type Return
DXC Technology Company Equity 12.5%
Puretech Health PLC Equity 8.3%
Alibaba Group Holding Ltd. ADS Equity 4.8% Inc. Equity 2.7%
OneMain Holdings Inc. Equity 3.1%

Source: Miller Value Partners

WW International (WW)) fell through the 50-day and 100-day moving averages. The company announced a multi-year agreement with James Corden to positively shift conversation around personal health. Taylor Morrison Home Corp (TMHC) fell as November pending home sales index was down 2.6% on a sequential basis, below expectations for it to be flat. On a YoY basis, November pending homes sales rose 16.4% following last month’s 20.4% rise. Stitch Fix, Inc. (SFIX), Desktop Metal Inc. (DM) and Uber Technologies Inc. (UBER) dropped on limited news.   

Exhibit 3: Significant Detractors from Performance, 12/24/20 - 12/31/20

Name Type Return
Stitch Fix, Inc. Equity -15.2%
Desktop Metal Inc. Equity -10.4%
Uber C32 1/22 Derivative -9.8%
WW International Equity -13.6%
Taylor Morrison Home Corp Equity -5.9%

Source: Miller Value Partners

Check out the Income Strategy weekly Update. Click to Read.

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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