Last week, the Opportunity Equity strategy strategy gained 3.37%, outperforming the S&P 500’s 0.66% gain (Exhibit 1). The strategy ended the week up 11.72% YTD, or 386 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Versus Equity Indices, Through 5/5/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (4/28 - 5/5) | 3.37% | 0.66% |
| MTD | 3.37% | 0.66% |
| QTD | 3.99% | 1.69% |
| YTD | 11.72% | 7.86% |
| Inception (annualized since 12/30/99) | 6.60% | 4.89% |
Source: Bloomberg, Miller Value Partners
RH (RH) was a top contributor during the week after the company released a new CEO compensatory arrangement that grants Gary Friedman, CEO, the option to purchase 1M shares of RH, exercisable over four years, if RH stock reaches prices of $100/$125/$150. The company also announced that it had completed its $300M share repurchase program announced in February and authorized a new $700M buyback. Apple Inc. C100 1/18 (AAPL) were top contributors after announcing second quarter results that were broadly inline (Revenue/EPS of $52.9B/$2.10 versus estimates of $53.0B/$2.02). The company announced a 10.5% dividend increase and +$35B in share repurchase. United Continental Holdings (UAL) crossed above the 50-day and 100-day moving average. Delta Air Lines Inc (DAL) crossed above the 50-day and 100-day moving average after releasing April PRASM growth of 1%, despite the hit from poor weather in Atlanta which they quantified at around 2%. Valeant Pharmaceuticals International Inc. (VRX) announced it reduced its senior secured term loans by an additional $220M, resulting in a total reduction of $3.6B of debt since the end of the first quarter 2016.
Exhibit 2: Significant Contributors to Performance, 4/28/17 - 5/5/17
| Name | Type | Return |
| RH | Equity | 19.1% |
| Apple Inc. C100 1/18 | Derivative | 11.3% |
| United Continental Holdings | Equity | 7.3% |
| Delta Air Lines Inc. | Equity | 7.2% |
| Valeant Pharmaceuticals International | Equity | 8.4% |
Source: Miller Value Partners
Genworth Financial Inc. (GNW) fell below the 50-day and 100-day moving average after it was reported that Genworth and China Oceanwide had withdrawn and refiled their joint notice to the Committee on Foreign Investment in the United States (CFIUS). This sparked speculation that the two companies received pushback from CFIUS on their original filing. Pulte Group Inc. (PHM) was down over the week after declaring a quarterly cash dividend of $0.09 per share, implying a 1.6% yield. There was minimal news on the other top detractors.
Exhibit 3: Significant Detractors from Performance, 4/28/17 - 5/5/17
| Name | Type | Return |
| Genworth Financial | Equity | -6.2% |
| Platform Specialty Products | Equity | -3.4% |
| Lennar Corp. | Equity | -1.4% |
| Pulte Group Inc. | Equity | -1.5% |
| Pandora Media Inc. | Equity | -1.6% |
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
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