Last week, the Opportunity Equity strategy gained 1.72%, outperforming the S&P 500’s 0.88% gain (Exhibit 1). The strategy ended the week up 23.20% YTD, or 1433 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 8/24/181
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (8/17 - 8/24) | 1.72% | 0.88% |
| MTD | 6.68% | 2.26% |
| QTD | 10.79% | 6.06% |
| YTD | 23.20% | 8.87% |
| Inception (annualized since 6/26/00) | 8.13% | 5.87% |
Source: Bloomberg, Miller Value Partners
RH (RH) announced the official opening of their New York City Gallery in the meatpacking district. Mizuho increased its target price for Bausch Health Companies (BHC) to $35 up from $31, 53% upside from where it closed on Friday. BHC received approval for Altreno (IDP-121) as a topical treatment for acne. They are expected to launch by 4Q18. OneMain Holdings Inc. (OMF) rose over the week. The company disclosed their July trust data which showed the average net loss rate for personal loans coming in at 7.68%, which was up 7bps MoM and down 56bps YoY. Direct Auto Loans had $1.5M in monthly losses equating to an annualized monthly loss rate of 1.81%, flat MoM and down 38bps YoY. Discovery Inc. (DISCA) crossed above the 50-day moving average, as Jefferies upgraded the stock to a buy rating with a price target of $34, upside of 19%. There was minimal news on Stitch Fix Inc. (SFIX).
Exhibit 2: Significant Contributors to Performance, 8/17/18 - 8/24/18
| Name | Type | Return |
| Stitch Fix Inc. | Equity | 15.4% |
| RH | Equity | 3.6% |
| Bausch Health Companies Inc. | Equity | 4.8% |
| OneMain Holdings Inc. | Equity | 3.4% |
| Discovery Inc. | Equity | 5.9% |
Source: Miller Value Partners
Teva Pharmaceuticals (TEVA) fell below the 50-day moving average. CenturyLink Inc. (CTL) was down over the week. MoffettNathanson downgraded the stock to sell with a price target of $19, downside of 16%. Foot Locker (FL) crossed below the 100-day moving average after releasing 2Q results. The company had EPS of $0.75 ahead of expectations of $0.70 with 0.5% same-store-sales in-line with guidance but operating margins decreased 70bps to 6.5%. Management reiterated positive low-single-digit same-store-sales in the back half to drive double-digit EPS growth. The company provided 3Q guidance below the Street with margins down 125bps YoY at the midpoint resulting in EPS coming in $0.10-0.15 below expectations. Flexion Therapeutics (FLXN) formed a death cross as the 50-day moving average fell below the 200-day moving average. There was minimal news on Endo International (ENDP).
Exhibit 3: Significant Detractors from Performance, 8/17/18 - 8/24/18
| Name | Type | Return |
| Teva Pharmaceuticals | Equity | -5.0% |
| CenturyLink Inc. | Equity | -3.1% |
| Foot Locker Inc. | Equity | -4.7% |
| Flexion Therapeutics | Equity | -2.1% |
| Endo International | Equity | -0.6% |
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.
©2018 Miller Value Partners, LLC
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