Last week, the Opportunity Equity strategy fell -10.90%, underperforming the S&P 500’s -5.75% loss. (Exhibit 1). The strategy ended the week down -34.14% YTD, 1,181 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/17/221
|Time Period||Opportunity Equity||S&P 500|
|Last Week (6/10 - 6/17)||-10.90%||-5.75%|
|Inception (annualized since 6/26/00)||6.03%||6.33%|
Source: Bloomberg, Miller Value Partners
Our TLT Puts (TLT P143 1/19/24) moved higher as the Fed hiked its benchmark interest rate by 75bps, its most aggressive hike since 1994 as inflation continues to stay elevated. Karuna Therapeutics (KRTX) rose in anticipation of its P3 KarXT data for schizophrenia expected in Q3 2022. Precigen Inc. (PGEN) rose on limited news. There was limited news on Alaunos Therapeutics, Inc. (TCRT).
Exhibit 2: Significant Contributors to Performance, 6/10/22 - 6/17/22
|TLT P143 1/24||Derivative||3.4%|
|Karuna Therapeutics Inc||Equity||3.4%|
|TCRT Restricted Warrant 2019||Derivative||0.0%|
Source: Miller Value Partners
Ovintiv Inc (OVV) and Diamondback Energy Inc (FANG) fell through the 50 and 100-day moving average, while Energy Transfer LP (ET) fell through the 50, 100 and 200-day moving averages. Each of our energy investments followed commodity prices lower over the course of the week. Taylor Morrison Home Corp (TMHC) fell as interest rates moved higher and B. Riley downgraded the stock from Buy to Neutral lowering its price target to $28 from $36 (35% upside). Wells Fargo also lowered its price target from $28 to $25 (21% upside) while maintaining its buy rating. Delta Air Lines Inc (DAL) fell on limited news.
Exhibit 3: Significant Detractors from Performance, 6/10/22 - 6/17/22
|Taylor Morrison Home Corp||Equity||-21.6%|
|Diamondback Energy Inc||Equity||-21.3%|
|Energy Transfer LP||Equity||-15.5%|
|Delta Air Lines Inc||Equity||-13.8%|
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.
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