Last week, the Opportunity Equity strategy fell -4.20%, underperforming the S&P 500’s -2.41% decline (Exhibit 1). The strategy ended the week up 16.17% YTD, 1,445 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 2/26/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (2/19 - 2/26) | -4.20% | -2.41% |
| MTD | 7.56% | 2.76% |
| QTD | 16.17% | 1.72% |
| YTD | 16.17% | 1.72% |
| Inception (annualized since 6/26/00) | 9.55% | 6.83% |
Source: Bloomberg, Miller Value Partners
Norwegian Cruise Lines (NCLH) gained over the week after reporting 4Q results. The company reported adjusted 4Q20 EPS of -$2.33 below consensus of -$2.17 with cash burn coming in at $190M per month above the $175M cash burn previously guided to due to $15m in additional relaunch-related expenses. Management noted that 2H21 booking volumes remain below historical levels but that pricing remains in-line with pre-pandemic levels even after accounting for future cruise credits. 2022 booking trends are positive with 1H22 significantly ahead of 2019’s record levels with pricing in-line when excluding future cruise credits. Energy Transfer LP (ET) gained after Piper Sandler raised their price target on the company to $9/shr (upside of 18%) and upgraded the stock to overweight. UBS moved the company to its Top Pick List and raised their price to $16, upside of 109%. WW International Inc. (WW) gained after reporting 4Q results that beat expectations. The company reported revenue of $1.378B vs $1.371B expected with adjusted EBITDA beat at $285.6M vs $266M expected. Guidance for 2021 missed expectations with the company noting that they hope to meet and potentially beat what they did in 2020 in 2021. This would imply revenue of $1.3B vs $1.43B expected and EBITDA of $288M vs $325M expected. Rocket Companies Inc. (RKT) crossed above the 50 and 100-day moving average after reporting a strong 4Q. The company reported revenue of $4.7B ahead of consensus of $3.9B with EPS coming in at $1.14 vs $0.87 estimated. The company originated $107.2B in mortgages during the December quarter. The company announced a special dividend of $1.11/shr. Management provided guidance for 1Q21 with originations of $98-103B with gain on sale margin of 3.6-3.9%. Precigen Inc. (PGEN) gained on the week after both Stifel and Wells Fargo initiated on the name with an overweight and buy rating. Wells Fargo set a price target of $14 (upside of 66%) while Stifel set their price target at $13 (upside of 54%).
Exhibit 2: Significant Contributors to Performance, 2/19/21 - 2/26/21
| Name | Type | Return |
| Norwegian Cruise Line Holdings Ltd. | Equity | 10.1% |
| Energy Transfer LP | Equity | 9.1% |
| WW International Inc. | Equity | 7.0% |
| Rocket Companies Inc. | Equity | 7.8% |
| Precigen Inc. | Equity | 8.1% |
Source: Miller Value Partners
Desktop Metal Inc. (DM) fell below the 50-day moving average. The company announced the redemption of all of its outstanding public warrants by March 29th. ADT Inc. (ADT) fell below the 50, 100, and 200-day moving average after announced 4Q results. The company reported revenue of $1.315B ahead of consensus of $1.29B with EBITDA of $533M coming in slightly below consensus of $539M. The company guided for 2021 revenue of $5.05-$5.25B or $5.4-5.65B if you adjust for residential ownership model transition putting the midpoint above consensus of $5.3B. EBITDA is expected to be $2.1-2.2B (or $2.18-2.3B adjusted) vs consensus of $2.242B. FCF guidance for 2021 disappointed coming in at $450-550M vs consensus of $648M due to increased spending on subscriber acquisition spend of roughly $150-250M. Vivint announced that it filed a patent infringement lawsuit against ADT in which Vivent asserts that ADT has infringed on six of Vivint’s US patents. Uber Technologies (UBER) fell below the 50-day moving average after Didi announced its expansion into Western Europe in the first half of 2021. Farfetch Ltd (FTCH) reported 4Q results that showed strong platform GMV growth of 49% YoY while also hitting EBITDA profitability for the first time. Management guided for 1Q21 GMV growth of 50-55% vs 49% expected with adjusted EBITDA of -$20M at the midpoint vs consensus of -$5M. For the full year, the company expects GMV growth of 30-35% slightly below consensus of 38% with EBITDA margin coming in at 1-2%. The company does not expect any meaningful contribution from their Tmall launch in 2021 and announced plans to launch beauty in FY22 as well as the rollout of E-concessions as a Service.
Exhibit 3: Significant Detractors from Performance, 2/19/21 - 2/26/21
| Name | Type | Return |
| Desktop Metal Inc. | Equity | -23.1% |
| ADT Inc. | Equity | -21.4% |
| Uber C32 1/22 | Derivative | -22.1% |
| Farfetch Ltd | Equity | -10.2% |
| *New Security* | Equity | -22.3% |
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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