Last week, the Opportunity Equity strategy fell 2.99%, underperforming the S&P 500’s 0.91% loss. (Exhibit 1). The strategy ended the week down -33.40% YTD, 1,513 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/15/221
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (7/8 - 7/15) | -2.99% | -0.91% |
| MTD | 1.49% | 2.12% |
| QTD | 1.49% | 2.12% |
| YTD | -33.40% | -18.27% |
| Inception (annualized since 6/26/00) | 6.06% | 6.55% |
Source: Bloomberg, Miller Value Partners
Citigroup Inc (C) rose above the 50-day moving average after reporting better than expected Q2 earnings on Friday. The company reported revenues of $19.6B vs. $18.4B expected, driven by higher-than-expected net interest income (NII) due to rising interest rates, and a strong beat in its fixed income, commodities, and currencies (FICC) business. Earnings came in at $2.19 vs. $1.70 expected, while tangible book value increased to $80.81 per share, resulting in a ROTCE of 11.2%. Citi plans to pause share repurchases for the time being to reach its new CET 1 Capital Target of 13% by mid-2023, up from 11.9% today. Taylor Morrison Home Corp (TMHC) crossed above the 50-day moving average. Credit Suisse upgraded the company from neutral to outperform with a $33 price target (26% upside) while JP Morgan cut its price target from $35 to $30 (14% upside), maintaining its overweight rating. JMP Securities lowered its price target on OneMain Holdings Inc (OMF) from $68 to $58 (46% upside), while Wells Fargo downgraded the company from overweight to equal weight with a $40 price target (1% upside), and Barclays lowered its price target from $72 to $62 (56% upside). ADT (ADT) launched its new Virtual Assistance Program, allowing customers to gain on-demand virtual support to perform basic tasks for their home alarm systems without the need for in-home assistance – allowing for more prompt customer service, increased cost savings, and fewer “truck rolls”.
Exhibit 2: Significant Contributors to Performance, 7/8/22 - 7/15/22
| Name | Type | Return |
| Citigroup Inc | Equity | 6.7% |
| Taylor Morrison Home Corp | Equity | 3.6% |
| *New Security* | Equity | 3.6% |
| OneMain Holdings Inc | Equity | 2.3% |
| ADT Inc | Equity | 2.4% |
Source: Miller Value Partners
Alibaba Group Holding Ltd. ADS (BABA) fell after the Wall Street Journal reported that executives from the company’s cloud division were summoned by Shanghai authorities in connection with a theft of police data impacting more than 1B Chinese residents. Our puts on 20-year+ Treasuries (TLT P 143 1/24) followed interest rates lower over the course of the week. Alphabet (GOOGL) fell through the 50-day moving average as news around digital ads became increasingly negative with analysts cutting estimates ahead of earnings. Societe Generale cut its price target on Farfetch Ltd (FTCH) from $18 to $12 (83% upside), while maintaining its buy rating. Mattel Inc (MAT) fell through the 200-day moving average as Jefferies lowered its price target from $27 to $24 (25% upside), while Goldman Sachs raised its price target from $30 to $31 (43% upside).
Exhibit 3: Significant Detractors from Performance, 7/8/22 - 7/15/22
| Name | Type | Return |
| Alibaba Group Holding Ltd. ADS | Equity | -15.3% |
| TLT P 143 1/24 | Derivative | -11.2% |
| Alphabet Inc | Equity | -6.4% |
| Farfetch Ltd | Equity | -14.6% |
| Mattel Inc | Equity | -5.0% |
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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