Last week, the Opportunity Equity strategy gained 2.90%, underperforming the S&P 500’s 3.29% gain (Exhibit 1). The strategy ended the week up 9.18% YTD, 79 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 8/28/201
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (8/21 - 8/28) | 2.90% | 3.29% |
| MTD | 10.37% | 7.41% |
| QTD | 21.15% | 13.47% |
| YTD | 9.18% | 9.97% |
| Inception (annualized since 6/26/00) | 7.69% | 6.53% |
Source: Bloomberg, Miller Value Partners
Workday Inc. (WDAY) had a strong 26.6% return on the week. The company reported strong earnings for the second quarter, with sales of $1.062B well above consensus estimates of $1.043B with non-GAAP operating margins of 24.3% ahead of consensus of 18.9% leading to non-GAAP EPS of $0.84 vs. $0.66 expected. The company also raised sales guidance for the year to $4.255-4.265Bn, up 18% from last year and they expect operating margins to come in at 18% ahead of 16% previously guided. The strong quarter led to a spate of analyst price target changes, with Mizuho raising its target from $220 to $270 (upside of 10%), JMP raising to $296 from $202 (upside of 21.4%), as well as a host of others, including Cowen, Wells Fargo, Goldman Sachs, and Piper Sandler. Facebook Inc. (FB) gained after the company rolled out its Shops feature to businesses globally following a limited rollout in May. The company also announced that it is testing a shop tab within the Facebook app for US users. Susquehanna raised their price target on Alibaba Group Holding Ltd. (BABA) $350 from $275, upside of 21%. Alibaba’s fintech arm, Ant, filed paperwork in Hong Kong for an Initial Public Offering. Delta Air Lines Inc. (DAL) gained after the Trump administration’s decision to authorize the use of a blood-plasma treatment for COVID, which pushed the stock above the 50-day moving average to start the week. The stock was further helped by Abbott’s announcement of a new rapid coronavirus test. Bank of America maintained their buy rating on DXC Technology Company (DXC) with a price target of $25, upside of 21.6%.
Exhibit 2: Significant Contributors to Performance, 8/21/20 - 8/28/20
| Name | Type | Return |
| Workday Inc. | Equity | 26.6% |
| Facebook Inc. | Equity | 10.0% |
| Alibaba Group Holding Ltd. | Equity | 8.7% |
| Delta Air Lines Inc. | Equity | 17.3% |
| DXC Technology Company | Equity | 10.1% |
Source: Miller Value Partners
Farfetch Ltd. (FTCH) declined 6.7% after a report that Amazon.com is expected to launch a luxury platform in September. The platform was first reported in January but seemingly was delayed due to Covid-19. Taylor Morrison Home Corp. (TMHC) and Lennar Corp. (LEN) were down despite July new home sales rising 14% sequentially to 901k above the Street’s estimate of a 1.8% rise to 790k. On a YoY basis, July rose 36.3% following June’s 9% rise and May’s 14.5% rise. New home inventory fell 1.6% to 299k in July, down 8.8% YoY. July pending home sales increased 5.9% sequentially and 15.5% YoY which beat consensus of a 2% rise sequentially. There was minimal news on ADT Inc. (ADT) and Tivity Health Inc. (TVTY).
Exhibit 3: Significant Detractors from Performance, 8/21/20 - 8/28/20
| Name | Type | Return |
| Farfetch Ltd. | Equity | -6.7% |
| ADT Inc. | Equity | -4.5% |
| Taylor Morrison Home Corp | Equity | -5.4% |
| Tivity Health Inc. | Equity | -7.0% |
| Lennar Corp | Equity | -4.3% |
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
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