Last week, the Opportunity Equity strategy fell -6.09%, underperforming the S&P 500’s -5.04% loss. (Exhibit 1). The strategy ended the week down -26.08% YTD, 848 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/10/221
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (6/3 - 6/10) | -6.09% | -5.04% |
| MTD | -7.10% | -5.55% |
| QTD | -20.53% | -13.62% |
| YTD | -26.08% | -17.60% |
| Inception (annualized since 6/26/00) | 6.60% | 6.62% |
Source: Bloomberg, Miller Value Partners
Alibaba Group Holdings Ltd. ADS (BABA) rose above the 50 and 100-day moving averages on the belief that Chinese regulators were wrapping up their investigation of Didi, potentially marking the first sign of regulatory easing. This belief was further supported by news that China approved a second batch of video games this year. Alibaba traded up on a report that Chinese regulators may reconsider the listing of the company’s financial services arm, Ant Group; however, China’s regulators denied the Bloomberg report. Ovintiv Inc (OVV) and Diamondback Energy Inc (FANG) rose in sympathy with higher crude oil prices. Morgan Stanley lowered its price target on Ovintiv to $65 from $68 (10% upside). Piper Sandler raised its price target on Diamondback to $196 from $188 (26% upside), while Morgan Stanley cut its price target from $184 to $178 (15% upside). Our TLT Puts (TLT P143 1/19/24) followed rates higher over the week. Precigen Inc. (PGEN) rose on limited news.
Exhibit 2: Significant Contributors to Performance, 6/3/22 - 6/10/22
| Name | Type | Return |
| Alibaba Group Holding Ltd. ADS | Equity | 17.8% |
| Ovintiv Inc | Equity | 2.9% |
| TLT P143 1/24 | Derivative | 4.0% |
| Precigen Inc. | Equity | 7.2% |
| Diamondback Energy Inc | Equity | 0.5% |
Source: Miller Value Partners
Norwegian Cruise Line Holdings Ltd. (NCLH) fell after Morgan Stanley lowered its price target from $18 to $14 (6% upside) while maintaining its equal-weight rating, while Susquehanna initiated coverage with a positive rating and $20 price target (52% upside). Amazon.com Inc (AMZN) fell after 23-year veteran and CEO of Worldwide Consumer left the company to join Flexport as CEO. A number of price target reports were issued following the 20 for 1 stock split. Goldman Sachs also lowered its price target on the company to $170 from $185 (55% upside). Cleveland-Cliffs Inc (CLF) fell through the 200-day moving average while Teva Pharmaceutical-SP ADR (TEVA) fell through the 50, 100, and 200-day moving averages on limited news.
Exhibit 3: Significant Detractors from Performance, 6/3/22 - 6/10/22
| Name | Type | Return |
| Norwegian Cruise Line Holdings Ltd. | Equity | -15.8% |
| Teva Pharmaceutical-SP ADR | Equity | -10.5% |
| Amazon.com Inc | Equity | -10.4% |
| Cleveland-Cliffs Inc | Equity | -14.5% |
| *New Security* | Equity | -12.5% |
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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