Last week, the Opportunity Equity strategy lost 1.81%, underperforming the S&P 500’s -1.20% loss (Exhibit 1). The strategy ended the week up 2.86% YTD, or 51 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 3/16/181
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (3/9 -3/16) | -1.81% | -1.20% |
| MTD | 3.13% | 1.52% |
| QTD | 2.86% | 3.37% |
| YTD | 2.86% | 3.37% |
| Inception (annualized since 6/26/00) | 7.25% | 5.71% |
Source: Bloomberg, Miller Value Partners
Valeant Pharmaceuticals International Inc. (VRX) crossed above the 200-day moving average after Valeant CEO Joe Papa bought 30K shares and CFO Paul Herendeen bought 15K shares. Allergan (AGN) crossed above the 50-day moving average after hosting an investor conference where CEO Brent Saunders commented on evaluating all options to unlock shareholder value with a sense of urgency. Barron’s also had a positive write-up of AGN stating the shares could rise by 20% or more. Foot Locker Inc. (FL) crossed above the 100 and 200-day moving average as Credit Suisse initiated on the stock with an outperform rating and a price target of $50, upside of 13%. Pandora Media Inc. (P) crossed above the 100-day moving average. There was minimal news on Intrexon Corp. (XON).
Exhibit 2: Significant Contributors to Performance, 3/9/18 - 3/16/18
| Name | Type | Return |
| Valeant Pharmaceuticals International Inc. | Equity | 8.8% |
| Allergan PLC | Equity | 7.1% |
| Foot Locker Inc. | Equity | 3.7% |
| Intrexon Corp. | Equity | 2.1% |
| Pandora Media Inc. | Equity | 3.1% |
Source: Miller Value Partners
Flexion Therapeutics (FLXN) fell below the 50 and 100-day moving average after announcing 4Q results the week before. The company reported Zilretta sales below consensus but indicated confidence in the 2018-2019 top-line consensus estimates for sales as the official launch continues to gain traction. MGIC Investment Corp. (MTG) fell below the 50, 100 and 200-day moving average following news of a Freddie Mac pilot program that looks similar to a lender paid mortgage insurance (LPMI). Wayfair Inc. (W) was down over the week after Overstock called out the company and declared a shift to a “classic internet growth strategy” at its e-commerce business to compete with Wayfair. Stitch Fix Inc. (SFIX) fell below the 50-day moving average after announcing 2Q results which beat expectations but provided mixed 3Q guidance. The company had revenues of $296M above the high-end of guidance and adjusted EBITDA of $18.2M above the guided range ($11.5M-$15.5M) driven by active clients of 2.508M vs. consensus of 2.455M. The company increased the low-end of FY18 revenue guidance to $1.19B-$1.22B from $1.17B-$1.22B but maintained adjusted EBITDA guidance of $50M at the midpoint as the company will increase its investment. The company provided 3Q guidance that was mixed with revenue guidance of $300-310M vs. consensus of $301M and adjusted EBITDA of $5-10M below expectations for $12.6M. The Chief Operating Officer, Mike Smith, sold 80K shares on Friday. Platform Specialty Products Corp. (PAH) fell below the 50-day moving average.
Exhibit 3: Significant Detractors from Performance, 3/9/18 - 3/16/18
| Name | Type | Return |
| Flexion Therapeutics | Equity | -12.0% |
| MGIC Investment Corp. | Equity | -15.9% |
| Wayfair Inc. | Equity | -8.5% |
| Stitch Fix Inc. | Equity | -9.6% |
| Platform Specialty Products Corp. | Equity | -4.1% |
Source: Miller Value Partners
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.
©2018 Miller Value Partners, LLC
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