Last week, the Opportunity Equity strategy lost -0.04%, underperforming the S&P 500’s 2.23% rise (Exhibit 1). The strategy ended the week up 7.18% YTD, or 37 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 1/26/181
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (1/19 - 1/26) | -0.04% | 2.23% |
| MTD | 7.18% | 7.55% |
| QTD | 7.18% | 7.55% |
| YTD | 7.18% | 7.55% |
| Inception (annualized since 6/26/00) | 7.56% | 5.83% |
Source: Bloomberg, Miller Value Partners
Amazon.com Inc. (AMZN) continued to climb last week as it opened its first check-out free grocery store, Amazon Go, to the public in Seattle. Analysts raised their price targets for the company with Morgan Stanley increasing its price target to $1,400 from $1,250 and Evercore ISI increasing their price to $1,500 from $1,350. Wayfair Inc. (W) gained over the week as analysts expect the company to benefit from the tax cut with MKM raising their price target to $107 from $83. There was minimal news on Intrexon Corp. (XON), RH (RH), and Platform Specialty Products Corp. (PAH).
Exhibit 2: Significant Contributors to Performance, 1/19/18 - 1/26/18
| Name | Type | Return |
| Amazon.com Inc. | Equity | 8.3% |
| Intrexon Corp. | Equity | 10.5% |
| Wayfair, Inc. | Equity | 6.2% |
| RH | Equity | 3.6% |
| Platform Specialty Products Corp | Equity | 4.9% |
Source: Miller Value Partners
Valeant Pharmaceuticals International Inc. (VRX) crossed below the 50-day moving average after Goldman Sachs initiated coverage with a sell rating and a price target of $22, upside of 14%. Valeant announced Thursday that they would be using cash on hand to pay down $200M of their senior secured term loans. United Continental Holdings (UAL) crossed below the 200-day moving average after announcing fourth quarter results and Q1 guidance that were largely inline but the company upset the market with their capacity guidance for 2018 of 4-6% with similar rates expected for 2019 and 2020. The company reported 4Q EPS ex. special items of $1.40 ahead of consensus of $1.34. For 2018 the company guided for cost per available seat mile ex. fuel (CASM) of flat to down 1% (better than consensus of +1%) and EPS guidance of $6.50 to $8.50 versus consensus of $6.99. The company also provided 2020 EPS guidance of $11-13 compared to expectations of $10.27. American Airlines Group Inc. (AAL) and Delta Air Lines Inc. (DAL) fell in sympathy with United Airlines over fears of industry wide capacity growth. American released earnings that beat expectations with 4Q EPS of $0.95 vs. $0.92 consensus with a fifth consecutive quarter of revenue per available seat mile (RASM) growth of 5.6%. American guided for FY18 EPS of $5.50-$6.50 compared to consensus of $5.32 and RASM gain of 2-4% for the Q1. American reiterated their 2018 capacity guidance of 2.5%. Lennar Corp. (LEN) was down over the week after the company disclosed in their 10K that their mortgage subsidiary has been subpoenaed by the United States Department of Justice over underwriting and quality control processes related to FHA loans originated during the prior housing cycle. Earlier in the week the Credit Suisse analyst increased Lennar to a buy rating with a price target of $81, up from $67.
Exhibit 3: Significant Detractors from Performance, 1/19/18 - 1/26/18
| Name | Type | Return |
| Valeant Pharmaceuticals International Inc | Equity | -10.2% |
| United Continental Holdings | Equity | -13.0% |
| American Airlines Group Inc | Equity | -8.6% |
| Delta Air Lines Inc | Equity | -7.9% |
| Lennar Corp | Equity | -5.5% |
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.
©2017 Miller Value Partners, LLC
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