Last week, the Opportunity Equity strategy declined -5.30%, underperforming the S&P 500’s -2.58% decline (Exhibit 1). The strategy ended the week up 2.86% YTD, or 788 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 5/31/191
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (5/24 - 5/31) | -5.30% | -2.58% |
| MTD | -14.44% | -6.35% |
| QTD | -9.56% | -2.56% |
| YTD | 2.86% | 10.74% |
| Inception (annualized since 6/26/00) | 6.21% | 5.47% |
Source: Bloomberg, Miller Value Partners
Intrexon (XON) moved above its 50-day moving average on continued insider buying. CEO Randal Kirk purchased 825,451 shares for over $3.9M. Ziopharm (ZIOP) announced an exclusive licensing agreement with the National Cancer Institute for intellectual property for the development and commercialization of cell therapies for cancer. Under the agreement, Ziopharm will have the rights to two groups of technologies for use with its “Sleeping Beauty” platform, including T-cell receptors, as well as manufacturing methods and processes to generate large numbers of modified T-cells. Qualcomm (QCOM) bounced back nicely last week after asking the U.S. judge who declared its business model anti-competitive to put the ruling on hold while the company appeals. Discovery Inc (DISCA) rose on insider buying as the CEO of Global Direct-to-Consumer purchased 35,900 shares for roughly $1M. There was minimal news on Avon (AVP).
Exhibit 2: Significant Contributors to Performance, 5/24/19 - 5/31/19
| Name | Type | Return |
| Avon Products Inc | Equity | 1.6% |
| Intrexon Corp | Equity | 3.0% |
| Ziopharm Oncology Inc | Equity | 1.4% |
| Qualcomm Inc | Equity | 0.9% |
| Discovery Inc - A | Equity | 0.4% |
Source: Miller Value Partners
Generic pharma stocks Teva Pharmaceuticals (TEVA) and Endo International (ENDP) continued to slide on litigation concerns surrounding price fixing allegations and opioid exposure. Bank of America downgraded Teva from “Buy” to “Underperform” with a $9 price target, 1% above current levels, citing a challenging road ahead on mounting legal issues and uncertainty surrounding the company’s ability to secure crucial new generic drug approvals. Separately, Teva announced an $85M settlement with the state of Oklahoma in connection with an opioid lawsuit. JP Morgan lowered their price target on Endo from $9 to $6, still a 21% implied upside compared to the current price. Flexion (FLXN) fell below its 50 and 100-day moving averages while Alexion Pharmaceuticals (ALXN) fell below its 200-day moving average. There was minimal news on Bausch Health (BHC).
Exhibit 3: Significant Detractors from Performance, 5/24/19 - 5/31/19
| Name | Type | Return |
| Bausch Health Companies Inc | Equity | -11.9% |
| Teva Pharmaceutical-SP ADR | Equity | -20.5% |
| Endo International plc | Equity | -16.8% |
| Flexion Therapeutics | Equity | -13.4% |
| Alexion Pharmaceuticals | Equity | -10.6% |
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.
©2019 Miller Value Partners, LLC
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