Last week, the Opportunity Equity gained 2.02%, outperforming the S&P 500’s 0.87% rise (Exhibit 1). The strategy ended the week up 6.25% YTD, or 259 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity versus Equity Indices, Through 2/10/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (2/3 - 2/10) | 2.02% | 0.87% |
| MTD | 6.15% | 1.73% |
| QTD | 6.25% | 3.66% |
| YTD | 6.25% | 3.66% |
| Inception (annualized since 12/30/99) | 6.38% | 4.72% |
Source: Bloomberg, Miller Value Partners
Quotient Technology Inc. (QUOT) was a top contributor for the week after releasing strong fourth quarter results. QUOT beat on both revenues and EBITDA reporting sales of $75M vs. consensus of $70M and EBITDA of $11.3M vs. consensus of $6.6M while transactions grew 47% YoY. RBC maintained it’s outperform rating while raising its price target to $17, upside of 29%. Apple Inc. (AAPL) hired Timothy Twerdahl, previously the director of Amazon’s Fire TV division, as a vice president in charge of Apple TV product marketing. American Airlines Group Inc. (AAL) was upgraded to market perform from underperform at Bernstein. American released January data which showed capacity up 1.2% with total revenue passenger miles down 0.3%. First quarter guidance was maintained with TRASM expected to be up 2.5-4.5% YoY. Valeant Pharmaceuticals International Inc. (VRX) crossed above the 50-day moving average. Goldman Sachs initiated coverage of Platform Specialty Products Corp. (PAH) with a buy rating and a price target of $15, upside of 17%.
Exhibit 2: Significant Contributors to Performance, 2/3/17 - 2/10/17
| Name | Type | Return |
| Quotient Technolgy Inc. | Equity | 20.0% |
| Apple Inc. C100 1/18 | Derivative | 10.7% |
| American Airlines Group Inc. | Equity | 5.3% |
| Valeant Pharmaceuticals International | Equity | 5.8% |
| Platform Specialty Products | Equity | 3.3% |
Source: Miller Value Partners
Twitter Inc. (TWTR) announced disappointing fourth quarter results along with lower first quarter guidance which resulted in 7 downgrades during the week and shares falling below the 200-day moving average. Twitter reported fourth quarter revenues of $717M versus consensus of $740M but beat on adjusted EBITDA of $215M versus consensus of $180M. First quarter guidance showed adjusted EBITDA of $75-95M, far below consensus of $191M. Gilead Sciences Inc. (GILD) was down after announcing fourth quarter data that beat expectations but providing 2017 guidance that disappointed. Fourth quarter EPS beat by $0.10 but management guided HCV 2017 sales of $7.5-9B compared to consensus of $11.8B. Management also announced a 10% increase in the dividend. Genworth Financial Inc. (GNW) disclosed fourth quarter earnings in line with expectations and reaffirmed its view that China Oceanwide’s deal to acquire GNW will close in mid-2017. Based on where GNW closed on Friday, there is a 58% upside to the deal price. RH (RH) was downgraded to underperform at Buckingham with a price target of $22, 13% below where it closed on Friday. The company was had to announce a recall of 2,700 dining tables due to risk of lead exposure. There was minimal news on Endo Pharmaceuticals Holdings Inc. (ENDP).
Exhibit 3: Significant Detractors from Performance, 2/3/17 - 2/10/17
| Name | Type | Return |
| Twitter Inc. | Equity | -11.5% |
| Gilead Sciences Inc. | Equity | -8.3% |
| Genworth Financial Inc. | Equity | -4.7% |
| Endo Pharmaceuticals Inc. | Equity | -5.1% |
| RH | Equity | -4.1% |
Source: Miller Value Partners
Did you know we publish a weekly update for Income Opportunity Strategy? 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
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