Last week, the Opportunity Equity strategy fell -2.46%, underperforming the S&P 500’s 1.26% gain (Exhibit 1). The strategy ended the week up 17.95% YTD, 470 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 5/7/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (4/30 - 5/7) | -2.46% | 1.26% |
| MTD | -2.46% | 1.26% |
| QTD | 1.10% | 6.67% |
| YTD | 17.95% | 13.25% |
| Inception (annualized since 6/26/00) | 9.54% | 7.32% |
Source: Bloomberg, Miller Value Partners
WW International Inc. (WW) surged through the 50-day and 100-day moving average as the company reported quarterly results and gave guidance that was more optimistic than analyst expectations. Revenue was in-line with analyst estimates, coming in at $332mm relative to the $332mm that was anticipated. Gross margin excluding one-time charges came in at 59.9% vs estimates for 57.2% with EBITDA coming in at $25.9mm ahead of estimates of $22.6mm. The company also expressed optimism going forward, guiding that they will exceed 2020 revenue. DA Davidson raised their price target from $33 to $39 (upside of 5.3%), while Citi pushed their price target from $30 to $40 (upside of 8.0%). Energy Transfer LP (ET) demonstrated strong results in the quarter which handily beat analyst expectations. Revenue of $17bn crushed estimates of $11.8bn, while adjusted EBITDA blew out estimates for $2.77bn, coming in at $5.04bn. Guidance improved for the year from $10.6-$11bn in adjusted EBITDA to $12.9bn-$13.3bn, both largely due to the $2.4bn in benefits realized from Winter Strom Uri, with $100mm of additional progress. The company also paid down $3.7bn in debt during the quarter, using their strong cash flow to reduce leverage. Stifel raised their price target from $10 to $15 (upside of 52.4%). The Chemours Company (CC) posted revenue of $1.44bn that just beat estimates for $1.41bn. EBITDA came in slightly above estimates coming in at $268mm relative to expectations for $265mm.The company saw 11% volume growth which was partially offset by a 2% decline in pricing. The company raised guidance for the year for adjusted EBITDA, to a range of $1.1bn-$1.25bn, with free cash flow over $450mm. RBC raised their price target to $36 from $33 (upside of 4.0%), while UBS moved their price target from $29 to $31 (downside of % 10.5%), and Argus raised the company from hold to buy with a price target of $40 (upside of 15.5%). Vontier Corp (VNT) rose through the 100-day moving average as the company beat street earnings estimates. Sales of $707.4mm were above expectations of $668.8mm, with adjusted EPS coming in at .63c, vs consensus of .55c. The company raised their full year revenue growth guidance from -1%-+1% to mid-single digit percentage growth, and EPS guidance by 30 cents to $2.55-$2.65 per share. The strong quarter prompted a number of price target changes, with Barclays increasing their target from $40 to $44 (upside of 26.5%), B of A Securities increasing their price target from $38 to $42 (upside of 20.8%), and Morningstar increased their fair value estimate from $40 to $42 (upside of 20.8%). DXC Technology Company (DXC) rose on limited news.
Exhibit 2: Significant Contributors to Performance, 4/30/21 - 5/7/21
| Name | Type | Return |
| WW International Inc | Equity | 33.5% |
| Energy Transfer LP | Equity | 14.3% |
| DXC Technology Company | Equity | 4.8% |
| The Chemours Co | Equity | 14.7% |
| Vontier Corp | Equity | 10.9% |
Source: Miller Value Partners
Quotient Technology (QUOT) fell below the 50-day and 100-day moving averages as the company posted lower than expected gross margins despite revenue that came in over estimates. Revenue of $115mm was 4% above estimates, however gross margin declined 140bps to 43.7% due to a change in the company’s sales mix. The company raised their guidance on revenue from $490-$520mm to $505-$525mm, and EBITDA from $45-$65mm to $50-$65mm. The company further argued that the mix shift should be transitory and gross margin should recover over the next couple of quarters. Oppenheimer increased their price target from $13 to $15 (upside of 16.2%). Vroom, Inc. (VRM) fell below the 50-day, 100-day, and 200-day moving average in sympathy with rival Carvana, which posted results that beat estimates but were clouded by retail gross profit per unit (GPU) coming in below expectations, raising industry wide concerns. Despite beating estimates, Uber Technologies Inc. (UBER) fell as investors weighed concerns over drivers being reclassified as employees. Gross Bookings came in at $19.5bn, above street estimates for $18.1bn. Adjusted EBITDA was -$359mm, above estimates for a -$451mm loss. The company is still on track to break even on an EBITDA basis by the end of the year, but continuing concerns that Uber might have to reclassify large swaths of their workforce as employees weighed on the stock. The company also noted that they are seeing near term driver supply challenges. Truist increased their price target to $75 from $74 (upside of 59.5%), JPM upped their target from $72 to $74 (upside of 57.4%), but DA Davidson dropped their target from $72 to $70 (upside of 48.8%) among others. Desktop Metal (DM) dropped despite announcing that they are launching a new additive manufacturing process for wooden parts called Forust. Bausch Health Companies (BHC) dropped below the 50-day and 100-day moving averages as the company made no mention as part of their quarterly results of the Bloomberg report that they were considering a sale of their B&L business in lieu of a spin, increasing the likelihood they go through with their previously announced business separation. The company did announce an executive team for the new business, and updated its separation progress. Revenue missed slightly, coming in at $2.04bn vs. estimates of $2.06bn, however adjusted EBITDA of $852mm was over consensus estimates for $817mm, while the company reiterated their full year guidance. RBC adjusted their price target down from $42 to $41 (upside of 46.0%).
Exhibit 3: Significant Detractors from Performance, 4/30/21 - 5/7/21
| Name | Type | Return |
| Quotient Technology Inc. | Equity | -21.0% |
| Vroom, Inc. | Equity | -13.8% |
| UBER C32 1/22 | Derivative | -28.9% |
| Desktop Metal Inc. | Equity | -14.2% |
| Bausch Health Companies Inc | Equity | -12.7% |
-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.
©2020 Miller Value Partners, LLC
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