Last week, the Opportunity Equity strategy fell -2.26%, underperforming the S&P 500’s 0.42% gain (Exhibit 1). The strategy ended the week up 19.53% YTD, 229 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/9/211
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (7/2 - 7/9) | -2.26% | 0.42% |
| MTD | -1.66% | 1.72% |
| QTD | -1.66% | 1.72% |
| YTD | 19.53% | 17.24% |
| Inception (annualized since 6/26/00) | 9.52% | 7.43% |
Source: Bloomberg, Miller Value Partners
It was the first week for new Amazon.com Inc. (AMZN) CEO Andy Jassy, who takes over for founder Jeff Bezos. Andy becomes CEO after running Amazon Web Services and working with Jeff Bezos at the company for 24 years. The stock gained as the Pentagon canceled a $10bn cloud contract with Microsoft, putting Amazon back in the running for a portion of the business as the Pentagon now plans for a “multi-vendor” project. Jeffries Initiated Coverage with a Buy rating and a price target of $56 on Green Thumb Industries (GTBIF) (upside of 67%) based on strong industry growth. There was limited news on Capital One Financial Corp (COF).
Exhibit 2: Significant Contributors to Performance, 7/2/21 - 7/9/21
| Name | Type | Return |
| AMZN C3050 1/23 | Derivative | 22.2% |
| Amazon.com Inc. | Equity | 5.9% |
| Capital One Financial Corp | Equity | 2.0% |
| *New Security* | Equity | 5.5% |
| Green Thumb Industries Inc. | Equity | 1.7% |
Source: Miller Value Partners
Diamondback Energy Inc. (FANG) fell over the week following the price of oil, which took a hit mid-week from increasing concerns around the spread of the Delta variant dampening demand. Wells Fargo raised their price target on the name to $101 from $90 (upside of 13.0%). The RealReal Inc. (REAL) fell through the 50-day and 200-day moving averages as the company gave a 2nd quarter business update. Gross Merchandising Value came in at $350mm beating estimated of $336mm for the quarter, and is now 53% above the same level in 2019 before the pandemic. Average Order Value was also above estimates at $520 relative to $481 estimates. Needham initiated coverage with a buy rating and a price target of $35 (upside of 93.6%). Morgan Stanley lowered their price target on Alibaba Group Holding (BABA) from $300 to $270 (upside of 31.1%) as the company faces fears of slowing growth in China, and increased regulatory scrutiny. HSBC lowered their price target from $288 to $270 (upside of 31.1%), and Oppenheimer lowered their price target from $320 to $310 (upside of 50.5%) among others. Uber Technologies (UBER) fell through the 50-day and 200-day moving average as Didi, which Uber owns 12%, was removed from App Stores in China after suspension order. Cowen released their US survey report showing rising MAUs (monthly active users) and rising purchase frequency QoQ and YoY for Uber Eats. Cowen maintained their $80 price target (upside of 63.0%). WW International Inc. (WW) dropped through the 50-day moving average as Morgan Stanley published their Mobile App Download (MAD) Tracker which estimates WW to have 4.72M subscribers at the end of 2Q well below consensus expectations of 5.14M.
Exhibit 3: Significant Detractors from Performance, 7/2/21 - 7/9/21
| Name | Type | Return |
| Diamondback Energy Inc. | Equity | -8.8% |
| The RealReal, Inc. | Equity | -10.8% |
| WW International Inc. | Equity | -8.3% |
| Alibaba Group Holding Ltd. ADS | Equity | -5.4% |
| Uber C32 1/22 | Derivative | -12.7% |
-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.
©2020 Miller Value Partners, LLC
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