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Jun 08, 2021

Opportunity Equity Update for Week Ended 6/4/21

Christina Siegel Malbon

Desktop Metal Rises on Price Target Increase While Delta Falls on Updated Guidance

Last week, the Opportunity Equity strategy gained 1.92%, outperforming the S&P 500’s 0.64% increase (Exhibit 1). The strategy ended the week up 22.39% YTD, 904 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/4/211

Time Period Opportunity Equity S&P 500
Last Week (5/28 - 6/4) 1.92% 0.64%
MTD 1.92% 0.64%
QTD 4.90% 6.76%
YTD 22.39% 13.35%
Inception (annualized since 6/26/00) 9.69% 7.29%

Source: Bloomberg, Miller Value Partners

Desktop Metal (DM) rose through the 50-day moving average as Benchmark Securities raised their price target from $22 to $28 (upside of 88.7%). The company announced that they have become the first additive manufacturing company to qualify 4140 low-alloy steel for their platform for the mass production. Energy Transfer (ET) announced its intention to raise $900M via a 6.5% Series H perpetual preferred series. The company is using the proceeds to repay debt and for general purposes. Wells Fargo upgraded DXC Technology Company (DXC) to overweight with a price target of $48 from $26 (upside of 20.3%) on increasing confidence in the company’s turnaround strategy. Barclays raised their price target for Diamondback Energy Inc. (FANG) to $95 from $82 (upside of 10.7%), while maintaining its equal-weight rating. There was limited news on ADT Inc. (ADT).

Exhibit 2: Significant Contributors to Performance, 5/28/21 - 6/4/21

Name Type Return
Desktop Metal Inc. Equity 17.4%
ADT Inc Equity 6.8%
Energy Transfer LP Equity 8.9%
DXC Technology Company Equity 5.2%
Diamondback Energy Inc Equity 7.2%

Source: Miller Value Partners

Bausch Health Companies Inc. (BHC) and Clearside Biomedical announced the US FDA filing acceptance for Xipere. The drug is an investigational therapy for the treatment of macular edema. Delta Air Lines Inc. (DAL) dropped through the 50-day moving average. The company released updated their 2Q guidance. The company sees quarterly revenue of $6bn to $6.2bn (down 50-52% from 2Q19 levels) vs previous guidance of down 50-55%. Cost per available seat mile (CASM) ex-fuel costs is expected to be at the high end of previous guidance at 9% vs previous guidance of 6-9% with fuel costs now estimated at $2.10-2.15/gallon vs $1.85-1.95 previously. The CEO noted that the airline will not be taking on additional net debt and will be back to investment grade in the next two years. Puretech Health PLC (PRTC) fell through the 50-day and 100-day moving average on limited news. There was limited news on Quotient Technology Inc. (QUOT) during the week.

Exhibit 3: Significant Detractors from Performance, 5/28/21 - 6/4/21

Name Type Return
*New Security* Equity -7.3%
Puretech Health PLC Equity -4.2%
Bausch Health Companies Inc Equity -2.6%
Delta Air Lines Inc Equity -3.6%
Quotient Technology Inc. Equity -3.7%

-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.

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