Last week, the Opportunity Equity strategy lost 12.46%, underperforming the S&P 500’s -2.02% decline (Exhibit 1). The strategy ended the week down -45.74% YTD, or 2,318 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 4/3/201
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (3/27 - 4/3) | -12.46% | -2.02% |
| MTD | -11.13% | -3.68% |
| QTD | -11.13% | -3.68% |
| YTD | -45.74% | -22.56% |
| Inception (annualized since 6/26/00) | 4.10% | 4.79% |
Source: Bloomberg, Miller Value Partners
Teva Pharmaceutical (TEVA) gained after the FDA approved the use of chloroquine phosphate and hydroxychloroquine for emergency treatment of Covid-19 patients. Peloton Interactive Inc. (PTON) crossed above the 50 and 100-day moving average. Bank of America out with a positive note saying downloads for Peloton were up 138% YoY in the first quarter compared to 13% in 4Q while also noted that demand seems to be outstripping supply on the second hand market. Energy names moved higher as the President Trump tweeted that he expects Russia and Saudi Arabia to announce an oil production cut of 10-15 MMbbl/d, or ~10-15% of global supply. Energy Transfer LP (ET) benefited from the news while announcing earlier in the week their plan to maintain their quarterly dividend at $0.305/common unit, a 22% yield. Amazon.com Inc. (AMZN) crossed above the 50-day moving average. Bank of America raised their 2020 revenue estimates but lowered their profit due to lower margins while keeping their price target the same at $2,480, or upside of 30.5%.
Exhibit 2: Significant Contributors to Performance, 3/27/20 - 4/3/20
| Name | Type | Return |
| Teva Pharmaceuticals | Equity | 11.1% |
| Peloton Interactive Inc. | Equity | 11.0% |
| Energy Transfer LP | Equity | 14.7% |
| Amazon.com Inc. | Equity | 0.4% |
| Cash | Equity | 0.0% |
Source: Miller Value Partners
Airlines declined over the week as Delta Air Lines Inc. (DAL) announced that they expect revenue to be down 90% in 2Q and noted that they are burning more than $60M/day. United Airlines Holdings Inc. (UAL) announced that it had cut about 80% of its capacity in April with even larger cuts expected in May and noted that it is losing more than $100M/day with 4Q revenue expected to be down at least 30% YoY. After the close, it was disclosed that Berkshire Hathaway sold 12M delta shares over Wednesday and Thursday for a total of $314M. Berkshire still owns 58.9m Delta shares. OneMain Holdings Inc. (OMF) declines as USB lowers its EPS for 2020 and 2021 referencing higher net charge-offs and a contraction in lending portfolios for 2020. They maintain a buy rating on the name with a price target of $36, upside of 136%. Wells Fargo lowered their price target for Brighthouse Financial Inc. (BHF) to $29 from $37, upside of 47%. There was minimal news on Tivity Health Inc. (TVTY).
Exhibit 3: Significant Detractors from Performance, 3/27/20 - 4/3/20
| Name | Type | Return |
| United Airlines Holdings Inc. | Equity | -30.3% |
| OneMain Holdings Inc. | Equity | -31.9% |
| Brighthouse Financial Inc. | Equity | -22.9% |
| Delta Air Lines Inc. | Equity | -23.9% |
| Tivity Health Inc. | Equity | -33.1% |
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. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners.
©2019 Miller Value Partners, LLC
Share