Last week, the Opportunity Equity strategy gained 3.35%, outperforming the S&P 500’s 1.75% gain (Exhibit 1). The strategy ended the week down -1.08% YTD, or 346 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/31/201
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (7/24 - 7/31) | 3.35% | 1.75% |
| MTD | 9.76% | 5.64% |
| QTD | 9.76% | 5.64% |
| YTD | -1.08% | 2.38% |
| Inception (annualized since 6/26/00) | 7.19% | 6.17% |
Source: Bloomberg, Miller Value Partners
Goldman Sachs raised their price target on Farfetch Ltd (FTCH) from $21 to $27.40, upside of 13% citing market share gains While Keybanc raised their price target to $25, in-line with where the stock closed on Friday. Vroom Inc. (VRM) gained as YipitData showed 2Q units sold well above estimates. Facebook Inc. (FB) crossed above the 50-day after reporting 2Q results which beat expectations. The company reported Revenue of $18.7B ahead of consensus of $17.6B with advertising revenue up 14% in North America. Global Monthly Active Users (MAU) were 2.7B, up 12%, was ahead of the Street at 2.63B with operating margins beating expectations at 32% vs. 27% expected leading to GAAP EPS of $1.80 vs $1.44. Management guided for 3Q ad revenue to up 10% YoY with MAUs to be flat to slightly down in most regions in 3Q. OneMain Holdings (OMF) gained after reporting 2Q, which beat expectations. The company report EPS of $0.80 ahead of consensus of $0.22 driven by much lower loss reserve build. Net interest income was $808M ahead of consensus of $663M with 2Q20 originations of $2.05B with average receivables of $17.9B was ahead of consensus of $16.8B. Net charge-offs (NCOs) came in at of 6.3% with the company guided for 2020 net charge-offs (NCOs) of 5.8-6% compared to 2019 levels of ~6%. The board declared a $2/shr special dividend in addition to the $0.33/shr regular quarterly dividend (5% yield). There was minimal news on ADT Inc. (ADT).
Exhibit 2: Significant Contributors to Performance, 7/24/20 - 7/31/20
| Name | Type | Return |
| Farfetch Ltd | Equity | 19.9% |
| Vroom Inc. | Equity | 20.8% |
| ADT Inc. | Equity | 8.2% |
| Facebook Inc. | Equity | 10.0% |
| OneMain Holdings | Equity | 13.9% |
Source: Miller Value Partners
Boeing Co. (BA) declined over the week after announcing 2Q results. The company reported revenues of $11.8B below the Street at $12.95B with an operating loss of -$2.96B vs. expectations for -$1.13B leading to EPS loss of -$4.79 vs -$2.56 estimated. Free cash flow came in at -$5.6B coming in better than expectations of -$6.7B. The company noted that they expect negative operating cash flow to continue until deliveries ramp up but they see a path to positive free cash flow in 2021. Taylor Morrison Home Corp. (TMHC) declined after reporting 2Q result. The company reported EPS of $0.50 slightly below the Street at $0.51. Homebuilding revenues were up 19%, to $14.7B, below the Street at $15.4B. Orders were up 23% YoY, in-line with pre-announcement with the company noting that July orders were up 80% YoY. The company guided for 3Q deliveries of 3,000-3,200 vs consensus of 2,890 with FY20 guidance of 12k deliveries slightly below the Street at 12,648. Delta Air Lines Inc. (DAL) announced that more than 17,000 employees have chosen to leave the company through buyouts or early retirement packages. There was minimal news on Stitch Fix Inc. (SFIX).
Exhibit 3: Significant Detractors from Performance, 7/24/20 - 7/31/20
| Name | Type | Return |
| *New Security* | Equity | -25.3% |
| Boeing Co. | Equity | -9.1% |
| Stitch Fix Inc. | Equity | -5.5% |
| Taylor Morrison Home Corp. | Equity | -2.3% |
| Delta Air Lines Inc. | Equity | -3.8% |
Source: Miller Value Partners
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.
©2019 Miller Value Partners, LLC
Share