Last week, the Opportunity Equity strategy lost -4.96%, underperforming the S&P 500’s -2.18% decline. (Exhibit 1). The strategy ended the week down -33.30% YTD, 1,419 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/1/221
|Time Period||Opportunity Equity||S&P 500|
|Last Week (6/24 - 7/1)||4.96%||-2.18%|
|Inception (annualized since 6/26/00)||6.08%||6.51%|
Source: Bloomberg, Miller Value Partners
Taylor Morrison Home Corp. (TMHC) rose over the week as interest rates moved lower. May new home sales rose 10.7% sequentially to 696k, well above the Street’s outlook for a 0.2% decline to 590k. On a YoY basis, May fell 5.9% following April’s and March’s decline of 22.2% and 18.8%, respectively. Karuna Therapeutics Inc. (KRTX) crossed above the 200-day moving average. JMP securities maintained their outperform rating on Karuna while raising their price target to $190 from $175, upside of 51%. Teva Pharmaceuticals (TEVA) announced promising interim results from its Pan-European Real World study (PEARL) showing that 54.7% of patients in the study had their monthly-migraine-days reduced by 50% or more, over the six-month period from the start of treatment. Puretech Health (PRTC) crossed above the 50-day moving average. The company initiated a Phase II dose-confirmation study in LYT-100 with data expected by year-end 2023. Diamondback Energy Inc. (FANG) followed energy prices marginally higher over the week.
Exhibit 2: Significant Contributors to Performance, 6/24/22 - 7/1/22
|Taylor Morrison Home Corp||Equity||5.9%|
|Karuna Therapeutics Inc||Equity||7.8%|
|Diamondback Energy Inc.||Equity||1.3%|
Source: Miller Value Partners
UBS downgraded Farfetch Ltd (FTCH) to neutral with a price target of $10 (upside of 38%) down from $13, citing recession concerns while JPMorgan lowered their price target from $20 to $16 (120% upside) while maintaining its overweight rating. Norwegian Cruise Line Holdings Inc. (NCLH) traded down on fears of a recession. Barclays initiated on the name with an equal-weight rating and a price target of $14, 24% upside while Citi maintained their neutral rating but lowered their price target to $13 from $18, upside of 15%. Alphabet Inc. (GOOGL) fell below the 50-day moving average while DXC Technology Company (DXC) fell below the 50 and 100-day moving average and Mattel Inc. (MAT) fell through the 200-day moving average on limited news.
Exhibit 3: Significant Detractors from Performance, 6/24/22 - 7/1/22
|Norwegian Cruise Line Holdings Inc.||Equity||-14.3%|
|DXC Technology Company||Equity||-6.9%|
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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