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Apr 26, 2021

Opportunity Equity Update for Week Ended 4/23/21

Christina Siegel Malbon

Vroom Rises on Rising Used Car Prices, While Teva Falls on Lawsuit Uncertainty

Last week, the Opportunity Equity strategy fell -0.86%, underperforming the S&P 500’s -0.11% loss (Exhibit 1). The strategy ended the week up 18.20% YTD, 640 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 4/23/211

Time Period Opportunity Equity S&P 500
Last Week (4/16 - 4/23) -0.86% -0.11%
MTD 1.31% 5.30%
QTD 1.31% 5.30%
YTD 18.20% 11.80%
Inception (annualized since 6/26/00) 9.57% 7.27%

Source: Bloomberg, Miller Value Partners

Vroom Inc. (VRM) crossed above the 200-day moving average as Piper Sandler published a report on how surging used car prices are expected to boost 1Q profitability at Vroom, Carvana ACV Auctions and Cargurus. Norwegian Cruise Line Holdings (NCLH) rose through the 50-day moving average. Goldman Sachs upgraded the stock to a buy rating with a price target of $37 (upside of 24.1%), while Berenberg increased their target from $22 to $25 (downside of 16.1%). Desktop Metal Inc. (DM) announced that it had qualified the use of 316L stainless steel for its Production System further expanding their list of supported materials. Metromile (MILE) announced the appointment of Regi Vengalil as Chief Financial Officer. He joins the company with robust operational and financial background having spent time at Expedia and Lending Club. Precigen Inc. (PGEN) crossed above the 50-day moving average on limited news.

Exhibit 2: Significant Contributors to Performance, 4/16/21 - 4/23/21

Name Type Return
Vroom, Inc. Equity 9.8%
Norwegian Cruise Line Holdings, Inc. Equity 5.3%
Desktop Metal Inc. Equity 8.2%
Precigen Inc. Equity 7.7%
Metromile, Inc. Equity 21.0%

Source: Miller Value Partners

Teva Pharmaceuticals (TEVA) fell below the 200-day moving average as a trial began in California where four municipalities are seeking $50bn in damages from the drug makers (Johnson & Johnson, Teva, Endo, and AbbVie’s Allergan unit) over allegations that the companies used deceptive marketing and downplayed opioids’ addictive risks. As part of the companies’ defense, they had subpoenaed the state Board of Registered Nursing, the State Board of Pharmacy, and the Medical Board of California and state Department of Justice to provide prescribing and enforcement information over the past 30 years. California’s Supreme Court denied review of their Appeal ruling in January that rejected the manufacturers’ requests. ADT Inc. (ADT) dropped despite Bank of America increasing their price target from $8.50 to $9 (downside of 2.8%). Uber Inc. (UBER) fell despite Nomura initiating coverage with a buy rating and a price target of $80 (upside of 38.1%). The company announced plans to launch Uber Eats in Germany in the coming weeks. Inc. (AMZN) dropped as Business Insider reported that numerous senior executives are planning on leaving the company.

Exhibit 3: Significant Detractors from Performance, 4/16/21 - 4/23/21

Name Type Return
*New Security* Currency -17.5%
Teva Pharmaceutical-SP ADR Equity -4.7%
ADT Inc. Equity -3.7%
Uber C32 1/22 Derivative -5.0%
AMZN C3050 1/23 Derivative -6.6%

-Source: Miller Value Partners

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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.

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