Last week, the Opportunity Equity strategy gained 2.91%, outperforming the S&P 500’s -1.28% gain (Exhibit 1). The strategy ended the week up 21.95% YTD, 1,701 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 2/12/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (2/5 - 2/12) | 2.91% | 1.28% |
| MTD | 12.92% | 6.01% |
| QTD | 21.95% | 4.94% |
| YTD | 21.95% | 4.94% |
| Inception (annualized since 6/26/00) | 9.82% | 7.01% |
Source: Bloomberg, Miller Value Partners
Quotient Technology Inc. (QUOT) rose after reporting 4Q results. The company reported revenue of $142.5mm vs. estimates of $121mm with gross margin of 35.1% below expectations for 46%. EBITDA came in at $17.9mm above expectations of $14.4mm. The company issued long-term revenue guidance of 15-20% growth, with more conservative guidance of 13% for 2021. There was a spate of analyst price target changes on the news. Colliers increased their price target from $14 to $19 (upside of 49.5%), Oppenheimer increased their price target from $10 to $13 (upside of 2.3%), and Craig-Hallum increased their price target from $14 to $25 (upside of 96.7%). Bausch Health Companies Inc. (BHC) rose as activist investor Carl Icahn disclosed a 7.83% stake in the company. The company responded to the filing saying that they remain committed to splitting the business into two parts, but are open to pursuing all opportunities. Further adding to the shareholder activity, Glenview (6% owner) sent a letter to the company arguing the company has not acted to unlock shareholder value and urging the company to sell its eye care business. Vroom, Inc. (VRM) rose as Wells Fargo raised their price target from $55 to $60 (upside of 17.8%). The company also posted its first ever Super bowl ad to increase brand awareness. CFO David Jones also sold $2.5mm of shares during the week. The RealReal (REAL) had a strong week on limited news.
Exhibit 2: Significant Contributors to Performance, 2/5/21 - 2/12/21
| Name | Type | Return |
| Quotient Technology Inc. | Equity | 28.5% |
| *New Security* | Equity | 48.2% |
| The RealReal, Inc. | Equity | 13.9% |
| Bausch Health Companies Inc | Equity | 11.0% |
| Vroom, Inc. | Equity | 9.0% |
Source: Miller Value Partners
Teva Pharmaceuticals (TEVA) dropped after they posted fourth quarter results that were slightly above expectations with revenue of $4.45bn (expectations of $4.37bn), and EPS of $0.65 (expectations of $0.61), and issued 2021 guidance. Teva gave revenue guidance for 2021 of $16.4bn-$16.8bn with the midpoint falling below street estimates of $16.7bn. The company guided to free cash flow of $2bn to $2.3bn, with the midpoint falling below consensus of $2.26bn. The company said they remain optimistic about an opioid settlement but the stock dropped on the fact that Teva is pessimistic about the timing of reaching a deal. Desktop Metal Inc. (DM) named James Haley as the new CFO of the company. James was previously the Vice President of Finance for Desktop Metal. OneMain Holdings Inc. (OMF) beat 4Q estimates with revenue of $853mm vs estimates for $843mm and EPS of $2.77, above estimates for $2.00. The beat was driven by lower than expected provisions for bad loans. The company announced an all-in dividend of $3.95 with $0.45/shr coming in the form of a regular dividend and $3.50/ being a special dividend. Management guided for 1Q21 ending net receivables down moderately given tax season and stimulus checks but expects demand to start to increase in 2Q21. The company also announced their plans to roll out a credit card product in 2H21. Janney adjusted their price target to $61 from $58 (upside of 15.6%) and Piper Sandler increased their price target from $53 to $58 (upside of 10.0%). The stock was down following the sale of 7m shares from private equity firms Apollo and Varde. Ziopharm Oncology (ZIOP) rallied after naming Activist investor Robert Postma to the board of Directors last Friday. Flexion Therapeutics (FLXN) dropped below the 50-day, 100-day, and 200-day moving average on limited news.
Exhibit 3: Significant Detractors from Performance, 2/5/21 - 2/12/21
| Name | Type | Return |
| Teva Pharmaceutical | Equity | -9.2% |
| Desktop Metal Inc. | Equity | -2.4% |
| Flexion Therapeutics | Equity | -10.4% |
| OneMain Holdings Inc | Equity | -4.4% |
| Ziopharm Oncology Inc | Equity | -7.8% |
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.
©2020 Miller Value Partners, LLC
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