Last week, the Opportunity Equity strategy gained 1.86%, outperforming the S&P 500’s 1.81% gain. (Exhibit 1). The strategy ended the week down -7.22% YTD, 287 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 3/25/221
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (3/18 - 3/25) | 1.86% | 1.81% |
| MTD | 1.43% | 3.98% |
| QTD | -7.22% | -4.35% |
| YTD | -7.22% | -4.35% |
| Inception (annualized since 6/26/00) | 7.78% | 7.42% |
Source: Bloomberg, Miller Value Partners
Energy companies Ovintiv Inc. (OVV) and Diamondback Energy Inc. (FANG) moved higher along with oil prices with WTI ending the week at $113.90. Keybanc raised their price target to $152 (upside of 3.7%) from $147 on Diamondback. Capital One Securities raised their rating on Ovintiv to overweight with a price target of $82, upside of 48.7% while Raymond James raised their price target to $60 (upside of 8.8%) from $52. Cleveland-Cliffs (CLF) gained as hot-rolled coil steel (HRC) prices continued to move higher rising above $1,300/ton as the conflict continues in Ukraine. Goldman Sachs maintained their buy rating on the name while increasing their price target to $31 (-6.1%) while JPMorgan raised their price target to $44, upside of 33%. Our TLT $143 Put options (TLT 1/19/24 P143) increased over the week as interest rates continued to move higher as the Fed approved its first interest rate hike in more than three years. Splunk Inc. (SPLK) crossed above the 200-day moving average on limited news.
Exhibit 2: Significant Contributors to Performance, 3/18/22 - 3/25/22
| Name | Type | Return |
| Ovintiv Inc. | Equity | 14.9% |
| Cleveland-Cliffs Inc. | Equity | 20.1% |
| Splunk Inc. | Equity | 11.3% |
| Diamondback Energy Inc. | Equity | 11.5% |
| TLT P143 1/19/24 | Derivative | 17.2% |
Source: Miller Value Partners
Taylor Morrison Home Corp. (TMHC) fell through its 50,100 and 200-day moving average as rates moved higher over the week. Pending home sales fell 4.1% sequentially to 104.9, below consensus expectations for a 1% rise to 110.6. On a YoY basis, pending home sales fell 5.4% on top of last month’s decline of 9.6%. Our JD $75 Call Options (JD 1/19/24 C75) declined over the week after JD Logistics announced that it was seeking to raise roughly $1.1B to upgrade its logistics network and solutions build-up. Herbalife Nutrition Ltd. (HLF) fell over the week on fears around its exposure to Russia/Ukraine. Bloomberg reported a lawsuit filed by investors against Bausch Health Companies Inc. (BHC) alleging a “fraudulent transfer” in relation to Bausch’s planned spin-off of its eye health business (B&L). Mattel Inc. (MAT) fell below the 50-day moving average on limited news.
Exhibit 3: Significant Detractors from Performance, 3/18/22 - 3/25/22
| Name | Type | Return |
| Taylor Morrison Home Corp. | Equity | -12.3% |
| JD C75 1/19/24 | Equity | -18.9% |
| Herbalife Nutrition Ltd. | Equity | -8.6% |
| Bausch Health Companies Inc. | Equity | -5.7% |
| Mattel Inc. | Equity | -3.4% |
Source: Miller Value Partners
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1 The performance figures reflect the deduction of a model investment management fee of 1% (the highest fee for separate accounts under our fee schedule) and certain other expenses. For important information about Opportunity Equity Strategy performance, please click on the Opportunity Equity Strategy 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. Portfolio composition is shown as of a point in time and is subject to change without notice.
©2022 Miller Value Partners, LLC
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