Last week, the Opportunity Equity strategy lost -1.71%, outperforming the S&P 500’s -3.07% decline (Exhibit 1). The strategy ended the week up 14.93% YTD, or 339 basis points behind the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 8/2/191
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (7/26 - 8/2) | -1.71% | -3.07% |
| MTD | -2.74% | -1.60% |
| QTD | -0.15% | -0.19% |
| YTD | 14.93% | 18.32% |
| Inception (annualized since 6/26/00) | 6.77% | 5.79% |
Source: Bloomberg, Miller Value Partners
Ziopharm Oncology Inc. (ZIOP) gained after announcing that it had entered into an agreement with existing investors for the exercise of previously issued warrants to purchase common stock in a private placement that is expected to result in gross proceeds of $45M. This is expected to provide the company with capital to fund operations through 2021. OneMain Holding Inc. (OMF) gained over the week after reporting 2Q results which beat expectations. The company reported adjusted EPS of $1.62 versus $1.34 expected with 2Q net charge-offs (NCO) of 6.2%. The company declared a special dividend of $2/share. The company increased its outlook with net receivables at year-end 2019 expected to grow by 8-10% compared to 5-10% previously and with the NCO rate expected to come in at 6.1-6.3% compared to <6.5% previously. RH (RH) rose after announcing better than expected preliminary 2Q results. The company expects 2Q revenue to be $696-699M up from $681-688M and EPS in the range of $2.65-2.72 from $2.33-2.47. The company also raised full year guidance to sales of $2.658-2.674B (from $2.643-2.663B) and EPS of $9.08-9.52 (from $8.76-9.27). Avon Products Inc. (AVP) was up for the week after reporting 2Q results. The company reported 2Q EPS of $0.06 ahead of consensus of $0.03 with net sales of $1.17B below consensus of $1.24B. Net sales were impacted by a 10% decline in active representatives which was partially offset by a 9% increase in price/mix improvements. There was minimal news on Tivity Health Inc. (TVTY).
Exhibit 2: Significant Contributors to Performance, 7/26/19 - 8/2/19
| Name | Type | Return |
| Ziopharm Oncology Inc. | Equity | 22.6% |
| OneMain Holdings Inc. | Equity | 14.0% |
| RH | Equity | 4.6% |
| Avon Products Inc. | Equity | 7.1% |
| Tivity Health Inc. | Equity | 5.7% |
Source: Miller Value Partners
Brighthouse Financial Inc. (BHF) crossed below the 50, 100, and 200-day moving average as the Federal Reserve decided to cut interest rates, for the first time since 2008, by 25bps. Amazon.com Inc. (AMZN) crossed below the 50 and 100-day moving average after announcing 2Q results. Sales came in at $63.4B beating consensus of $62.6B but operating income came in at $3.1B below consensus of $3.7B with GAAP EPS of $5.22 missing consensus of $5.58. AWS sales grew 37.3% versus 41.4% in 1Q with operating margins declining to 25.3% versus 28.9% in 1Q. The company expects revenue of $66-70B in 3Q versus consensus of $67.3B and operating income of $2.1-3.1B below consensus of $4.4B. Micron Technology Inc. (MU) was raised to equal weight at Morgan Stanley with a price target of $48, 21% upside. The name was further hurt by Donald Trump’s tweet that new tariffs will be put on an additional $300B worth of goods and product. Facebook Inc. (FB) crossed below the 50-day moving average after reporting 2Q results. The company reported revenues of $16.9B ahead of the Street at $16.5B with operating income of $6.6B versus the Street at $6.2B and GAAP EPS of $1.99 versus consensus at $1.88. Daily active users and monthly active users grew in-line at 8% YoY. The company reiterated guidance of revenue growth deceleration QoQ throughout 2019. Alibaba Group Holdings (BABA) crossed below the 50, 100, 200-day moving average on the Trade War escalation.
Exhibit 3: Significant Detractors from Performance, 7/26/19 - 8/2/19
| Name | Type | Return |
| Brighthouse Financial Inc. | Equity | -12.0% |
| Amazon.com Inc. | Equity | -6.2% |
| Micron Technology Inc. | Equity | -7.2% |
| Facebook Inc. | Equity | -5.4% |
| Alibaba Group Holdings | Equity | -9.9% |
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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