Last week, the Opportunity Equity strategy gained 1.36%, underperforming the S&P 500’s 3.06% gain (Exhibit 1). The strategy ended the week down -31.26% YTD, or 2,077 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 4/17/201
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (4/9 - 4/17) | 1.36% | 3.06% |
| MTD | 12.59% | 11.32% |
| QTD | 12.59% | 11.32% |
| YTD | -31.26% | -10.49% |
| Inception (annualized since 6/26/00) | 5.35% | 5.55% |
Source: Bloomberg, Miller Value Partners
Farfetch Ltd (FTCH) crossed above the 100 and 200-day moving average following the release of the company’s preliminary 1Q20 results. The company announced GMV growth in 1Q of 43-46% YoY vs prior guidance of 44-51% with adjusted EBITDA of -$21M to -$25M better than the previous expectations of -$30M to -$35M. The company pulled their full year guidance but maintain that they expect to reach profitability in 2021. Amazon.com Inc. (AMZN) continued to climb over the week. JPMorgan named Amazon a top idea as they see potential for market share expansion. The company announced that they plan to add 75k more jobs. Peloton Interactive Inc. (PTON) crossed above the 100-day moving average. JPMorgan raised their price target on Peloton to $40 from $35, upside of 19% while Goldman raised their price target to $44 from $42, 31% upside. Alibaba Group Holdings (BABA) crossed above the 50 and 100-day moving average. Deutsche Bank raised their price target on the name to $258, upside of 23%, citing China’s improving performance since COVID-19. Alphabet Inc. (GOOGL) crossed above the 50 and 200-day moving average. The company announced a collaboration with Apple Inc. (AAPL) to bring COVID-19 contact tracing to 3 billion people.
Exhibit 2: Significant Contributors to Performance, 4/9/20 - 4/17/20
| Name | Type | Return |
| Farfetch Ltd | Equity | 20.0% |
| Amazon.com Inc. | Equity | 16.3% |
| Peloton Interactive Inc. | Equity | 17.2% |
| Alibaba Group Holdings | Equity | 6.7% |
| Alphabet Inc. | Equity | 6.0% |
Source: Miller Value Partners
United Airlines Holdings Inc. (UAL) declined over the week following the company’s announcement that they will cut May flight schedule by 90% noting that they expect demand to remain suppressed for the remainder of 2020. The company was approved for $5B in government grants and low interest loans as part of the $25B in airline assistance from the U.S. Treasury. The company later announced that they would be applying for $4.5B in loans from the US government program. Banks kicked off earnings seasons with both JPMorgan Chase & Co. (JPM) and Bank of America (BAC) declining for the week after announcing 1Q results. JPMorgan reported EPS of $0.78 below consensus of $2.18. The company reported revenues of $29.1B, with net-charge-offs of $1.5B and loan loss reserve build of $6.8B. The company revised guidance for 2020 with net interest income expected to be $55.5B from +$57B previously, with noninterest income expected to be down ~$3.5B YoY versus flat previously with approximately $65B in adjusted expenses. Bank of America reported EPS of $0.40 below consensus of $0.59. The company reported revenues of $22.8B, with net interest income of $12.3B ahead of consensus of $12B with net-charge-offs of $1.1B and loan loss reserve build of $3.6B. Bank of America repurchased $6.4B of common stock in 1Q before the suspension of its share repurchase program. Taylor Morrison Home Corp. (TMHC) declined as March total starts were announced at 1.216M a decrease of 22% MoM but an increase of 1.4% YoY. Total permits decreased 7% MoM but still increased 5% YoY to 1.353M. Susquehanna cut their price target on Taylor Morris to $20 from $37, upside of 72%. There was minimal news on Brighthouse Financial Inc. (BHF).
Exhibit 3: Significant Detractors from Performance, 4/9/20 - 4/17/20
| Name | Type | Return |
| Brighthouse Financial Inc. | Equity | -17.8% |
| United Airline Holdings Inc. | Equity | -7.7% |
| JPMorgan Chase & Co. | Equity | -7.4% |
| Bank of America Corp. | Equity | -6.4% |
| Taylor Morrison Home Corp. | Equity | -9.4% |
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. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners.
©2019 Miller Value Partners, LLC
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