Last week, the Opportunity Equity strategy gained 1.58%, outperforming the S&P 500’s 0.39% rise (Exhibit 1). The strategy ended the week up 27.22% YTD, or 650 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 12/8/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (12/1 - 12/8) | 1.58% | 0.39% |
| MTD | 1.40% | 0.19% |
| QTD | 5.58% | 5.67% |
| YTD | 27.22% | 20.72% |
| Inception (annualized since 12/30/99) | 7.15% | 5.39% |
Source: Bloomberg, Miller Value Partners
Valeant Pharmaceuticals International Inc. (VRX) announced that it had priced its previously announced offering of 9.00% senior notes due 2025. The offering price for the Notes was 98.611% and the proceeds will be used to repurchase $1.5B aggregate principal amount of outstanding 7% senior notes due 2020, 6.375% senior notes due 2020 and up to $200M of outstanding 5.375% senior notes due 2020. RH (RH) was up over the week after announcing Q3 results which were in-line with their preannouncement with net revenues increasing 8% YoY despite a 1% negative impact from Hurricanes Harvey and Irma. The company stated that they see cost savings and margin enhancement of $15-20M annually as a result of their reverse logistic and outlet business. The company guided for 2018 revenue growth of 8-9% and adjusted operating margins in the range of 9-10%. Wayfair Inc. (W) crossed above the 50-day moving average. Bank of America (BAC) announced that its board of directors had approved an incremental $5B share repurchase authorization in addition to its current authorization of $12B. American Airlines Group Inc. (AAL) increased after the International Air Transport Association (IATA) released 2018 industry forecasts which showed net profit rising to $38.4B from the $34.5B expected this year.
Exhibit 2: Significant Contributors to Performance, 12/1/17 – 12/8/17
| Name | Type | Return |
| Valeant Pharmaceuticals International Inc. | Equity | 14.2% |
| RH | Equity | 2.8% |
| American Airlines Group Inc. | Equity | 3.7% |
| Wayfair Inc. | Equity | 4.9% |
| Bank of America Corp. | Equity | 3.4% |
Source: Miller Value Partners
Platform Specialty Products Corp. (PAH) announced that it closed the previously-announced offering of an additional $250M aggregate principal amount of 5.875% senior notes due 2025 at par. Genworth Financial Inc. (GNW) was down over the week after it was announced the previous week that Genworth and China Oceanwide had extended their merger agreement again as they seek to resolve regulatory issues. The companies pushed back their deadline to April 1, 2018 from November 30th. There was minimal news on the other top detractors (EIGI, QUOT, XON).
Exhibit 3: Significant Detractors from Performance, 12/1/17 - 12/8/17
| Name | Type | Return |
| Endurance International Group Holdings | Equity | -8.1% |
| Quotient Technology Inc. | Equity | -2.1% |
| Intrexon Corp. | Equity | -1.9% |
| Platform Specialty Products Corp. | Equity | -1.6% |
| Genworth Financial Inc. | Equity | -1.5% |
Source: Miller Value Partners
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
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