Last week, the Opportunity Equity strategy was flat returning 0.00%, underperforming the S&P 500’s 0.21% gain (Exhibit 1). The strategy ended the week up 32.89% YTD, or 499 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 12/6/191
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (11/29 - 12/6) | 0.00% | 0.21% |
| MTD | 0.00% | 0.21% |
| QTD | 17.59% | 6.09% |
| YTD | 32.89% | 27.90% |
| Inception (annualized since 6/26/00) | 7.44% | 6.11% |
Source: Bloomberg, Miller Value Partners
RH (RH) rose over the week after reporting strong 3Q results. The company reported EPS of $2.79 beating consensus of $2.23 with revenue of $677.5M ahead of the Street at $676.4M. The company guided for 4Q revenue of $703-711.5M versus consensus of $710M with operating income of $115-119M and adjusted EPS of $3.50-3.62. The company expects to see at least 200bps of margin expansion in 2020. Flexion Therapeutics (FLXN) gained after Craig Hallum initiated coverage on the name with a buy rating and a $24 price target, upside of 23%. Goldman Sachs initiated coverage of Bausch Health Companies Inc. (BHC) with a neutral rating and a price target of $30, upside of 3%, while H.C. Wainwright maintained its buy rating but raised its price target to $60, upside of 106%. There was minimal news on Genworth Financial Inc. (GNW) and JPMorgan Chase & Co. (JPM).
Exhibit 2: Significant Contributors to Performance, 11/29/19 - 12/6/19
| Name | Type | Return |
| RH | Equity | 17.7% |
| Flexion Therapeutics | Equity | 10.1% |
| Bausch Health Companies Inc. | Equity | 3.1% |
| Genworth Financial Inc. | Equity | 4.6% |
| JPMorgan Chase & Co. | Equity | 2.5% |
Source: Miller Value Partners
Peloton Interactive Inc. (PTON) fell over the week after releasing their new holiday ad which sparked backlash with mostly negative commentary. Later in the week, the company released two new apps on Apple Watch and Fire TV devices while also lowering their digital only subscription service price to $12.99/month down from $19.49 previously. Teva Pharmaceuticals (TEVA) and Endo International (ENDP) declined over the week as the Street began to refocus on the opioid liability with analysts casting doubt on the ability for the companies to reach a settlement with the Ohio MDL. Bank of America downgraded ADT Inc. (ADT) to Neutral from Buy with a price target of $9.50, upside of 6%, noting the lack of near-term catalysts in the name. There was minimal news on Eventbrite Inc. (EB).
Exhibit 3: Significant Detractors from Performance, 11/29/19 - 12/6/19
| Name | Type | Return |
| Peloton Interactive Inc. | Equity | -7.4% |
| Eventbrite Inc. | Equity | -10.2% |
| Teva Pharmaceutical | Equity | -4.8% |
| ADT Inc. | Equity | -3.1% |
| Endo International | Equity | -4.7% |
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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