Last week, the Opportunity Equity strategy fell -1.37%, underperforming the S&P 500’s -1.15% loss. (Exhibit 1). The strategy ended the week down -21.29% YTD, 806 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/03/221
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (5/27 - 6/03) | -1.37% | -1.15% |
| MTD | -1.08% | -0.54% |
| QTD | -15.38% | -9.04% |
| YTD | -21.29% | -13.23% |
| Inception (annualized since 6/26/00) | 6.91% | 6.88% |
Source: Bloomberg, Miller Value Partners
Amazon.com (AMZN) rose in anticipation of the 20-1 stock split announced earlier this year, and after it was named to Evercore ISI’s Best “Core” Ideas list with a $205 price target (68% upside). Our TLT Puts (TLT P143 1/19/24) followed rates higher over the week. Ovintiv (OVV) rose in sympathy with higher crude oil prices, despite Mizuho slightly lowering its price target to $77 from $78 (34% upside) while maintaining its buy rating. Piper Sandler lowered its price target slightly on Alphabet Inc (GOOGL) to $2,775 from $2,900 (22% upside). Teva Pharmaceutical-SP ADR (TEVA) rose on limited news.
Exhibit 2: Significant Contributors to Performance, 5/27/22 - 6/03/22
| Name | Type | Return |
| Amazon.com Inc | Equity | 6.3% |
| TLT P143 1/24 | Derivative | 6.6% |
| Teva Pharmaceutical-SP ADR | Equity | 2.9% |
| Ovintiv Inc | Equity | 1.8% |
| Alphabet Inc | Equity | 2.0% |
Source: Miller Value Partners
Delta Air Lines Inc (DAL) fell through the 50, 100, and 200-day moving averages, while United Airlines Inc (UAL) 50 and 200-day moving averages as fuel prices continued to move higher. Delta published an Investor Update and is now guiding to better-than-expected revenue trends. Revenue per available seat mile (RASM) is expected to be up ~21.5%, significantly better than prior implied RASM of ~13.5%. The company also trimmed capacity plans, allowing it to tighten its adjusted operating margin guidance to the high end of the prior range at 13-14% from 12-14% previously. Cleveland-Cliffs Inc (CLF) fell through the 100 and 200-day moving average as Steel prices continued to move lower. Goldman Sachs lowered its price target to $27 from $36 (17% upside) while maintaining its buy rating. Farfetch Ltd (FTCH) fell after a number of price target revisions ranging from Goldman Sachs at $34 from $45 previously (284% upside) to Wedbush at $8 from $16 previously (-10% downside). Coinbase Global Inc (COIN) announced it would rescind a number of accepted job offers and extend its hiring freeze for the foreseeable future.
Exhibit 3: Significant Detractors from Performance, 5/27/22 - 6/03/22
| Name | Type | Return |
| Delta Air Lines Inc | Equity | -8.7% |
| United Airlines Holdings Inc | Equity | -8.2% |
| Cleveland-Cliffs Inc | Equity | -6.5% |
| Farfetch Ltd | Equity | -9.0% |
| Coinbase Global Inc | Equity | -11.5% |
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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