Last week, the Opportunity Equity strategy gained 1.40%, outperforming the S&P 500’s -1.79% loss. (Exhibit 1). The strategy ended the week down -4.77% YTD, 239 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 2/11/221
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (2/4 - 2/11) | 1.40% | -1.79% |
| MTD | 1.32% | -2.09% |
| QTD | -4.77% | -7.16% |
| YTD | -4.77% | -7.16% |
| Inception (annualized since 6/26/00) | 7.96% | 7.32% |
Source: Bloomberg, Miller Value Partners
Mattel Inc (MAT) rose above its 50-day moving average after releasing 4Q earnings. The company reported Q4 net sales and EPS of $1.795bn (+10%) and $0.53 (+34%), respectively, well above consensus estimates of $1.654bn and $0.32. Operating margin of 14.7% increased 210 bps Y/Y and beat consensus projections of 10.5%. The company provided FY22 guidance that came in well ahead of expectations with sales growth expected to be 8-10% (implies revenue of $5.94bn vs $5.51bn expected), with EBITDA of $1.1-1.25bn vs expectations for $1.0bn and EPS of $1.42-1.48 head of consensus of $1.38. The company also increased their FY23 goals, including net sales growth in the high-single-digits (up from mid-single-digits previously), operating margins of 16-17% (from mid-teens), and EPS >$1.90 (vs consensus of $1.58). Norwegian Cruise Line Holdings Inc. (NCLH) rose above its 50-day moving average after the company provided an in-depth business update in which they addressed the current booking environment, their return to profitability and current liquidity position. The company is currently operating at 70% of their berth capacity, and they expect to be back in full service by the early part of the second quarter 2022. NLCH noted bookings slowed due to Omicron impacts in late-4Q22, but over the last couple of weeks, they have accelerated. The company’s booked position for 1H22 is now below 2019’s “strong” levels, while 2H22 bookings are “in-line” with comparable 2019 levels. The company expects to reach positive cash flow in 2Q22 and net income positive in 2H22. Green Thumb Industries Inc. (GTBIF) rose above its 50-day moving average, while Tupperware Brands Corp (TUP) rose above its 100-day moving average, and Herbalife Nutrition Ltd. (HLF) rose above its 50 and 100-day moving averages on limited news.
Exhibit 2: Significant Contributors to Performance, 2/4/22 - 2/11/22
| Name | Type | Return |
| Mattel Inc | Equity | 13.4% |
| Tupperware Brands Corp | Equity | 25.1% |
| Green Thumb Industries Inc. | Equity | 11.4% |
| Herbalife Nutrition Ltd | Equity | 8.2% |
| Norwegian Cruise Line Holdings Ltd. | Equity | 5.9% |
Source: Miller Value Partners
Canada Goose Holdings (GOOS) fell after reporting 3Q earnings that disappointed and lowering full year guidance citing lower than expected retail traffic in APAC and EMEA along with Omicron restrictions. Net sales came in at C$586mm in-line with consensus of C$587mm with adjusted EPS of C$1.42 slightly below consensus of C$1.44. The company lowered FY22 guidance to net sales of C$1.09-1.105bn (down from C$1.12-1.175bn) vs consensus of C$1.16bn, with operating margins of 15.1-15.8% (down from 16.5-17.7%) vs consensus of 17.5% and adjusted EPS of C$1.02-1.11 (from C$1.17-1.33) vs consensus of C$1.32. Fiserv (FISV) fell through the 50 and 100-day moving averages after reporting Q4 results that were largely in-line with the consensus while providing FY22 guidance that disappointed on revenue and free cash flow (FCF). The company reported adjusted revenue of $4.02bn, 11% Y/Y, vs consensus of $4.03bn along with EPS of $1.57, 21% Y/Y, slightly ahead of consensus of $1.56. The company provided FY22 guidance of revenue growth of 7-9% (implies revenue of $16.29bn vs consensus of $16.54bn), EPS of $6.40-6.55 (vs consensus of $6.44) and FCF conversion of 95-100%, below medium-term company target of >105% driven by increased spend as the company moves faster on integrating new acquisitions, technology infrastructure spend and building up real estate to bring employees back to office. The company repurchased 9.9mm shares over the quarter for $1bn, bringing total year repurchases to 23.3mm shares (3.4% of shares outstanding). Citi lowered their price target on Meta Platforms Inc. (FB) to $258 (upside of 18%) from $330 previously while maintaining a neutral rating on the stock. Morgan Stanley downgraded General Motors (GM) to an equal-weight rating and lowered their price target to $55 from $75 (12.6% upside) due to lower-than-expected FY22 guidance. Alphabet Inc (GOOGL) fell through the 50, 100, and 200-day moving averages.
Exhibit 3: Significant Detractors from Performance, 2/4/22 - 2/11/22
| Name | Type | Return |
| Alphabet Inc | Equity | -6.3% |
| Meta Platforms Inc Cl A | Equity | -7.4% |
| Canada Goose Holdings | Equity | -13.6% |
| Fiserv Inc | Equity | -7.0% |
| General Motors Co | Equity | -4.8% |
-Source: Miller Value Partners
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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. Portfolio composition is shown as of a point in time and is subject to change without notice.
©2022 Miller Value Partners, LLC
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