Last week, the Opportunity Equity strategy gained 2.06%, outperforming the S&P 500’s 0.43% increase (Exhibit 1). The strategy ended the week up 24.09% YTD, 1,106 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/11/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (6/4 - 6/11) | 2.06% | 0.43% |
| MTD | 4.02% | 1.08% |
| QTD | 7.06% | 7.22% |
| YTD | 24.90% | 13.84% |
| Inception (annualized since 6/26/00) | 9.79% | 7.31% |
Source: Bloomberg, Miller Value Partners
The RealReal Inc. (REAL) rose through the 50-day and 200-day moving average as Karen Finerman, CEO of Metropolitan Capital Advisors, touted the stock on television as a potential M&A target. The company also continues to stress publically that they believe they will be near their goal of $100 gross profit dollars per order by the end of the year, due to supply picking up as the economy reopens. Stitch Fix, Inc. (SFIX) moved above the 100-day moving average as the company posted strong earnings for their third fiscal quarter of 2021. Revenue of $535.6mm beat estimates for $511mm, while EBITDA of $11mm was well over consensus estimates of -$7mm. Profitability was boosted by gross margins coming in at 46%, which was up 310 bps from the prior quarter and well over expectations for 44.3% margins. The revenue surprise was driven by the company adding 234k new clients in the quarter, the second highest in company history. JP Morgan increased their price target from $39 to $52 (downside of 18.9%), Truist increased their price target from $60 to $77 (upside of 20.1%), and Canaccord Genuity increased their price target from $68 to $76 (upside of 18.6%) among others. Teva Pharmaceutical Sp. (TEVA) broke through the 50-day and 100-day moving average as Jury selection began in a key opioid litigation case against the company and other drug companies in New York. The hope is that the trial will cause progress in global settlement talks. The company also expanded their fight against Eli Lilly over the patent of Teva’s drug Ajovy. The lawsuit seeks to halt Eli Lilly from selling their Emgality migraine treatment. Karuna Therapeutics Inc. (KRTX) rose through the 50-day and 100-day moving average after presenting at the Goldman Sachs Global Healthcare Conference. The company discussed encouraging early signs of tolerability in elderly volunteers for KarXT in the treatment of Alzheimer’s disease psychosis. There was limited news on ADT Inc. (ADT) during the week.
Exhibit 2: Significant Contributors to Performance, 6/4/21 - 6/11/21
| Name | Type | Return |
| The RealReal Inc. | Equity | 18.4% |
| Stitch Fix, Inc. | Equity | 15.4% |
| ADT Inc. | Equity | 5.3% |
| Teva Pharmaceutical Sp ADR | Equity | 6.8% |
| Karuna Therapeutics Inc. | Equity | 23.8% |
Source: Miller Value Partners
Desktop Metal Inc. (DM) dropped below the 50-day moving average. The company announced that they received a CE (Conformite Eruropeenne) mark for their Flexceran resin, for use in 3D fabrication of dental prosthetics. The mark affirms that Flexcera resins meet the requirement of the European Medical Devices Directive, paving the way for launch in the European Union. Alibaba Group Holding Ltd. (BABA) fell as China passed a tech law that allows President Xi Jinping the power to shut down or fine tech firms if they mishandle “core state data” as the country continues to crack down on tech companies in the country. The company also announced that they will be investing $1bn in Asia tech startups. Capital One Financial Corp was downgraded to neutral at Baird while reiterating their $145 (downside of 9.8%) price target due to the strong performance of the stock. BMO increased their price target from $168 to $205 (upside of 27.6%) while Bank of America reinstated their buy rating with a $192 price target, upside of 19.5%. The company announced that they had reached a truce with Paid in their long-running fight over customer data. Taylor Morrison Home Corp. (TMHC) dropped through the 100-day moving average on limited news. There was limited news on WW International Inc. (WW).
Exhibit 3: Significant Detractors from Performance, 6/4/21 - 6/11/21
| Name | Type | Return |
| Desktop Metal Inc. | Equity | -12.6% |
| Taylor Morrison Home Corp. | Equity | -6.2% |
| Alibaba Group Holding Ltd, ADS | Equity | -3.4% |
| WW International Inc. | Equity | -3.3% |
| Capital One Financial Corp | Equity | -3.4% |
-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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