Last week, the Opportunity Equity strategy surged 9.72%, outperforming the S&P 500’s -4.67% gain (Exhibit 1). The strategy ended the week up 18.50% YTD, 1,489 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 2/5/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (1/29 - 2/5) | 9.72% | 4.67% |
| MTD | 9.72% | 4.67% |
| QTD | 18.50% | 3.61% |
| YTD | 18.50% | 3.61% |
| Inception (annualized since 6/26/00) | 9.68% | 6.95% |
Source: Bloomberg, Miller Value Partners
Desktop Metal Inc. (DM) soared as they announced their Studio System 2, which allows them to print without a solvent debind phase. The system is designed for the office, and they believe it is the best solution for 3D printing high complexity metal parts in low volumes. Uber Technologies (UBER) crossed above the 50-day moving average as it announced a deal to buy the alcohol delivery company Drizly for $1.1bn in stock and cash. The deal helps Uber with their continuing plans to expand their delivery footprint beyond food and passengers. Stifel raised their price target from $60 to $65 (upside of 11.0%). Vroom, Inc. (VRM) climbed through the 50-day and 100-day moving average on limited news ahead of the company airing their first ever Super Bowl ad. OneMain Holdings (OMF) rose as Wells Fargo mentioned in a note that job postings suggest to them that the company may be in the early stages of launching a credit card product to couple with their existing offerings. Canada Goose Holdings (GOOS) surged as the company reported earnings that came in well above expectations. Revenue was C$474mm against expectations of just C$414mm. Gross margin also was higher than anticipated, coming in at 66.8% vs. expectations for 65.4%. EBIT of C$158mm beat estimates of C$143mm. This is despite 28% of their direct to consumer stores being closed due to the pandemic. The solid beat lead to a rash of price target changes, with Barclays moving their target up to $42 from $37 (downside of 3.3%), while Goldman Sachs lifted the stock from sell to neutral, moving their target up from $26 to $39 (downside of 10.2%), and RBC moved their target up from C$47 to C$68 (upside of 22.6%) among others.
Exhibit 2: Significant Contributors to Performance, 1/29/21 - 2/5/21
| Name | Type | Return |
| Desktop Metal Inc. | Equity | 38.3% |
| Uber C32 1/22 | Derivative | 30.1% |
| Vroom, Inc. | Equity | 26.8% |
| OneMain Holdings Inc. | Equity | 18.5% |
| Canada Goose Holdings | Equity | 29.8% |
Source: Miller Value Partners
Stitch Fix, Inc. (SFIX) dropped after a sharp run up over the past couple of months, as Baird cut the stock to Neutral with a price target of $85 (upside of 3.6%), while Stifel likewise cut the company to hold with a price target of $83 up from $64 (upside of 1.1%). DXC Technology Company (DXC) dropped as the company ended their talks about a possible merger with French competitor Atos. Atos had offered approximately $29 a share which was above where DXC was trading but below the enterprise value of the company. The company also posted fourth quarter results that beat expectations with revenue of $4.29bn vs. estimates of $4.20bn, and EBITDA of $781mm vs $618mm estimated. Wells Fargo increased their price target from $25 to $26 (upside of 0.2%), while Susquehanna increased their price target from $19 to $28 (upside of 7.9%) and BMO increased the price from $21 to $31 (upside of 19.5%). Puretech health PLC. (PRTC) fell despite the founded entity Vor pricing their IPO at $18/shr and raising $177mm. There was limited news on WW International Inc. (WW) and Precigen (PGEN).
Exhibit 3: Significant Detractors from Performance, 1/29/21 - 2/5/21
| Name | Type | Return |
| Stitch Fix, Inc. | Equity | -14.1% |
| DXC Technology Company | Equity | -8.0% |
| Precigen Inc. | Equity | -4.7% |
| Puretech Health PLC | Derivative | -6.4% |
| WW International Inc. | Equity | -4.4% |
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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