Last week, the Opportunity Equity strategy fell by -6.46%, underperforming the S&P 500’s -2.35% loss. (Exhibit 1). The strategy ended the week down -24.41% YTD, 929 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 5/13/221
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (5/6 - 5/13) | -6.46% | -2.35% |
| MTD | -8.91% | -2.53% |
| QTD | -18.73% | -11.03% |
| YTD | -24.41% | -15.12% |
| Inception (annualized since 6/26/00) | 6.73% | 6.79% |
Source: Bloomberg, Miller Value Partners
Taylor Morrison Home Corp. (TMHC) gained over the week as interest rates pulled back. Puretech Health (PRTC) released a press release stating that they had begun purchasing its shares through its $50M buyback program (10% of shares outstanding) announced the week before. SoFi Technologies Inc. (SOFI) gained after announcing 1Q results and raising full year guidance. The company reported adjusted net revenue of $322M ahead of consensus of $285M with EBITDA of $9M beating expectations of $3M showing strong membership growth (+70% YoY). The company increased full year revenue to $1.505-1.510B ahead of consensus of $1.462B and EBITDA of $100-105M, below consensus of $119M. The guidance assumes that the student loan moratorium will continue through the remainder of 2022. There was minimal news on Mattel Inc. (MAT) and DXC Technology Company (DXC).
Exhibit 2: Significant Contributors to Performance, 5/6/22 - 5/13/22
| Name | Type | Return |
| Taylor Morrison Home Corp. | Equity | 1.5% |
| Mattel Inc | Equity | 1.2% |
| Puretech Health | Equity | 3.7% |
| DXC Technology Company | Equity | 0.8% |
| SoFi Technology Inc. | Equity | 4.8% |
Source: Miller Value Partners
Ovintiv Inc. (OVV) fell below its 50-day moving average after reporting mixed 1Q results. The company reported total production ahead of the Street at 501 Mboe/d vs 496 Mboe/d expected with adjusted EPS missing expectations at $2.17 vs $2.49 expected and FCF coming in below consensus at $580M vs $663M. The company increased the quarterly dividend to $0.25 up from $0.20 (2.26% yield) while repurchasing 1.7m shares for $71M. The company increased full year CAPEX estimates due to inflation while decreasing production guidance due to weather impacts, higher Canadian royalty volumes and other delays. The company expects to increase shareholder return to 50% of post dividend FCF vs 25% today by October as the company moves closer to their debt reduction target. Bausch Health Companies Inc. (BHC) after the company reported 1Q results that missed expectations and lowered full year guidance. The company reported revenues of $1.92B below consensus of $2.04B with adjusted EBITDA of $732M below expectations of $815M and EPS disappointing at $0.72 vs $1.03 expected. The company lowered full year 2022 guidance with revenue expected to be $8.25-8.40B (down from $8.40-8.60B previously) and adjusted EBITDA of $3.225-3.375B (down from $3.350-3.500B previously). Coinbase Global Inc. (COIN) fell after announced 1Q results. The company reported revenue of $1.166B below consensus of $1.500B with adjusted EBITDA hitting $20M vs $353M expected and adjusted EPS of -$0.01 missing consensus of $1.01. Despite the softer start to the year, Coinbase remains committed to investing for the long-term but will cap adjusted EBITDA losses at -$500M this year. There were a number of downgrades and lowered price targets that followed. Norwegian Cruise Line Holdings Ltd (NCLH) fell following 1Q results. The company reported revenue of $522M below consensus of $737M due to lower occupancy while adjusted EBITDA of -$476M was worse than expected at -$282M leading to an EPS miss of -$1.82 vs -1.54. The company continues to show strong bookings for 2023 with booked position and pricing “significantly higher than 2019 and at record levels”. There was limited news on Tupperware Brands Corp. (TUP).
Exhibit 3: Significant Detractors from Performance, 5/6/22 - 5/13/22
| Name | Type | Return |
| Ovintiv Inc | Equity | -18.8% |
| Bausch Health Companies Inc. | Equity | -32.5% |
| Coinbase Global Inc. | Equity | -34.6% |
| Norwegian Cruise Line Holdings Ltd | Equity | -11.2% |
| Tupperware Brands Corp | Equity | -26.9% |
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 based on the representative account 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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