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Mar 14, 2023

Opportunity Equity Update for Week Ended 3/10/23

William Keenan

Alaunos Remains Roughly Flat on 4Q Results while OneMain Falls on Fears of Broader Financial Sector Contagion

Last week, the Opportunity Equity Strategy's representative account declined -9.86%, underperforming the S&P 500’s -4.51% fall. (Exhibit 1). The strategy ended the week up 6.58% YTD, 566 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 3/10/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (3/3 - 3/10) -9.86% -4.51%
MTD -7.61% -2.67%
QTD 6.58% 0.92%
YTD 6.58% 0.92%
1 Year -19.97% -7.79%
5 Year 1.31% 8.64%
10 Year 8.38% 11.68%
Inception (annualized since 6/26/00) 6.00% 6.41%

Source: Bloomberg, Miller Value Partners. Visit the Strategy page for Opportunity Equity performance through the most current month end period.

There were no positive contributors to the strategy’s performance last week.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 3/3/23 - 3/10/23

Name Type Net Return
Cash Cash 0.0%
Pangaea One, L.P. Equity 0.0%
TCRT Restricted Warrant 2019 Derivative 0.0%

Source: Miller Value Partners. See below for additional information.

Ovintiv Inc. (OVV) followed commodity prices lower over the course of the week. Wells Fargo lowered its price target to $64 from $71 (56% upside), while Mizuho lowered its price target to $66 from $70 (61% upside). Fitch affirmed its Long-Term Issuer Default Ratings on Ovintiv, maintaining its BBB- rating and stable outlook.

OneMain Holdings, Inc. (OMF) fell through the 50 and 100-day moving averages while Coinbase Global, Inc. (COIN) fell through the 50 and 200-day moving averages in sympathy with the broader financial sector after a failed capital raise at Silicon Valley Bank and a state-mandated closure of Signature Bank of New York stoked fears of broader contagion. Coinbase revealed it had $240M in corporate cash deposits at Signature Bank of New York, which the company expects to fully recover in-line with the Federal Reserve’s deposit backstop announcement via the Bank Term Funding Program (BTFP). Earlier in the week, Coinbase announced it had no client or corporate cash at Silvergate Bank, which had announced plans to voluntarily liquidate. Bloomberg Intelligence highlighted that OneMain’s higher credit underwriting standards adopted in 2022 should pay off in 2023 and 2024.

Expedia Group, Inc. (EXPE) and Norwegian Cruise Line Holdings Ltd. (NCLH) both sold off below the 50, 100, and 200-day moving averages along with the broader travel space on recession fears.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 3/3/23 - 3/10/23

Name Type Net Return
OneMain Holdings, Inc. Equity -12.2%
Ovintiv Inc. Equity -15.0%
Norwegian Cruise Line Holdings Ltd Equity -13.4%
Coinbase Global, Inc. Equity -17.2%
Expedia Group, Inc. Equity -8.7%

Source: Miller Value Partners. See below for additional information.

Check out the Income Strategy weekly Update. Click to Read.

As of prior week's market close unless otherwise stated.

1The performance figures for the representative Opportunity Equity account reflect the deduction investment management fees and certain other expenses. Returns greater than 1 year are annualized.

For additional information about Opportunity Equity Strategy performance, please click on the Opportunity Equity Strategy Composite Performance Disclosure. Past performance is no guarantee of future results.

2Significant Contributors and Detractors are based on holdings that had the greatest effect on representative account performance for the week. Holdings that have been in the portfolio since the end of the most recent calendar quarter are identified by name. The net return shown above for each individual security represents the change in market price of the security during the week, according to a third-party pricing service, or for the partial period held in the portfolio during the week.  Net returns also include any purchases or sales that were made during the week. 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. There is no guarantee that market trends discussed herein will continue. 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. References to specific securities are for illustrative purposes only. Portfolio composition is shown as of a point in time and is subject to change without notice. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners. 

©2023 Miller Value Partners, LLC