Last week, Opportunity Equity strategy gained 2.20%, outperforming the S&P 500’s 1.42% advance (Exhibit 1). The strategy ended the week up 23.59% YTD, or 1,254 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/14/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (7/7 - 7/14) | 2.20% | 1.42% |
| MTD | 2.45% | 1.56% |
| QTD | 2.45% | 1.56% |
| YTD | 23.59% | 11.05% |
| Inception (annualized since 12/30/99) | 7.14% | 5.01% |
Source: Bloomberg, Miller Value Partners
RH (RH) announced the completion of its $700M buyback program and reiterated 2Q sales and net income guidance. Valeant Pharmaceuticals (VRX) rebounded over the week after announcing the pay down of $811M of senior secured term loans following the closure of the sale of Dendreon. The company also announced the redemption of the remaining $500M outstanding principal of the 6.75% Senior Notes due 2018 using cash on hand. The Apple Inc. (AAPL) C100 1/18 call options crossed above the 100-day moving average despite cautious notes from Bank of America and Deutsche Bank on iPhones sales and delivery. Endurance International Group Holdings (EIGI) formed a golden cross when the 50-day moving average rose above its 200-day moving average. Pandora Media Inc. (P) crossed above the 50-day moving average.
Exhibit 2: Significant Contributors to Performance, 7/7/17 – 7/14/17
| Name | Type | Return |
| RH | Equity | 5.4% |
| Valeant Pharmaceuticals International Inc. | Equity | 6.2% |
| Apple Inc. - call options | Derivative | 10.2% |
| Endurance International Group Holdings | Equity | 7.8% |
| Pandora Media Inc. | Equity | 8.7% |
Source: Miller Value Partners
Intrexon Corp. (XON) fell below the 200-day moving average. The JPMorgan Chase & Co. warrants (JPM/WS) declined over the week after announcing 2Q results which beat consensus. JPM reported EPS of $1.82 ($1.71 excluding benefit from legal settlement) versus consensus of $1.59. The company reduced its net interest income guidance for the year to be up $4B+ YoY versus the up $4.5B YoY announced last quarter. Pulte Group Inc. (PHM) was cut to underperform at Mizuho with a price target of $22 (10% downside) and cut to equal weight at Barclays with a price target of $24 (1% downside). There was minimal news on the other top detractors.
Exhibit 3: Significant Detractors from Performance, 7/7/17 – 7/14/17
| Name | Type | Return |
| Intrexon Corp. | Equity | -4.5% |
| JPMorgan Chase & Co. - Warrants | Derivative | -2.7% |
| Bank of America Corp | Equity | -2.5% |
| Pulte Group Inc. | Equity | -2.3% |
| Ziopharm Oncology Inc. | Equity | -4.5% |
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
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