Last week, the Opportunity Equity strategy gained 2.56%, outperforming the S&P 500’s 0.06% decline (Exhibit 1). The strategy ended the week up 19.80% YTD, or 253 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 11/17/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (11/10 - 11/17) | 2.56% | -0.06% |
| MTD | -1.04% | 0.31% |
| QTD | -0.58% | 2.65% |
| YTD | 19.80% | 17.27% |
| Inception (annualized since 12/30/99) | 6.81% | 5.23% |
Source: Bloomberg, Miller Vcalue Partners
RH (RH) rose over the week after pre-announcing third quarter results ahead of its analyst day which beat estimates and guided Q4 and CY18 above expectations. The company raised Q3 EPS guidance to $1.02-$1.04 vs. prior guidance of $0.68-$0.80 and consensus of $0.79. Sales guidance was raised to $592.5M from $575-590M. RH took down sales guidance for Q4 due to the delay of the opening of its New York Design Gallery but raised its net income guidance to $37-41M from $33-37M. The company gave preliminary guidance for 2018 with net revenue of $2.58-2.62B vs consensus of $2.60B with adjusted operating margins of 9-10% compared to consensus of 7.1%. The guidance implies 2018 EPS of $5.00-$5.80 vs. consensus of $3.85. Foot Locker Inc. (FL) finished above the 50 and 100-day moving average after announcing 3Q results which beat. The company had same store sales decline -3.7% compared to expectations of -4.6% and EPS came in at $0.87 vs. consensus of $0.80 and the company repurchased $304M of shares during the quarter (7% of market cap). The company provided improved guidance for the fourth quarter with Q4 comps down 2-4% from prior guidance of down 3-4%. Endurance International Group Holdings (EIGI) crossed above the 50, 100 and 200-day moving average. There was minimal news on MGIC Investment Corp. (MTG) and Endo Pharmaceuticals Holdings Inc. (ENDP).
Exhibit 2: Significant Contributors to Performance, 11/10/17 – 11/17/17
| Name | Type | Return |
| RH | Equity | 19.8% |
| Foot Locker Inc | Equity | 34.5% |
| Endurance International Group Holdings | Equity | 13.2% |
| MGIC Investment Corp | Equity | 7.3% |
| Endo Pharmaceuticals Holdings Inc | Equity | 8.8% |
Quotient Technology Inc. (QUOT) fell below the 200-day moving average after announcing its intention to offer $175M aggregate principal amount of convertible senior notes due 2022 in a private placement. Wells Fargo resumed coverage of Apple Inc. (AAPL) with a market perform rating and a price target of $195, upside of 15%. There was minimal news on the other top detractors.
Exhibit 3: Significant Detractors from Performance, 11/10/17 - 11/17/17
| Name | Type | Return |
| Quotient Technology Inc. | Equity | -13.6% |
| Valeant Pharmaceuticals International Inc. | Equity | -4.5% |
| Genworth Financial Inc. | Equity | -5.3% |
| Apple Inc. C100 1/18 | Derivative | -5.7% |
| Alexion Pharmaceuticals | Equity | -3.7% |
1The performance figures reflect the deduction of a model investment management fee of 1% (the highest fee for separate accounts under our fee schedule) 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.
©2017 Miller Value Partners, LLC
Share