Last week, Opportunity Equity strategy gained 0.41%, underperforming the S&P 500’s 0.56% advance (Exhibit 1). The strategy ended the week up 24.10% YTD, or 1,243 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/21/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (7/14 - 7/21) | 0.41% | 0.56% |
| MTD | 2.88% | 2.13% |
| QTD | 2.88% | 2.13% |
| YTD | 24.10% | 11.67% |
| Inception (annualized since 12/30/99) | 7.16% | 5.04% |
Source: Bloomberg, Miller Value Partners
athenahealth Inc. (ATHN) performed well after announcing solid 2Q results with revenues of $301M versus estimates of $298M and EPS of $0.51 compared to consensus of $0.39. Sears Holdings (SHLD) announced the launch of its Kenmore products, with Alexa-enabled smart technology, on Amazon.com Inc. (AMZN). Also, Amazon filed a trademark for a meal kit service. D.A. Davidson & Co. initiated on OneMain Holdings Inc. (OMF) with a buy rating and a 5-yr price target of $55, upside of 109%. There was minimal news on the other top contributors.
Exhibit 2: Significant Contributors to Performance, 7/14/17 – 7/21/17
| Name | Type | Return |
| RH | Equity | 12.3% |
| athenahealth Inc. | Equity | 9.3% |
| Amazon.com Inc. | Equity | 2.4% |
| Alexion Pharmaceuticals | Equity | 4.0% |
| OneMain Holdings Inc. | Equity | 2.7% |
Source: Miller Value Partners
All three airlines were top detractors last week. United Continental Holdings (UAL) fell below the 50-day and 100-day moving average after announcing 2Q results which beat estimates but disappointed on 3Q guidance. Second quarter adjusted EPS was $2.75 ahead of consensus of $2.68. The company guided for 3Q PRASM of -1% to +1% y/y and raised CAPEX for 2017 and 2018. Delta Air Lines Inc. (DAL) continued to decline after announcing 2Q results the previous week with EPS coming in slightly below consensus ($1.64 vs. $1.66). American Airlines Group Inc. (AAL) moved in sympathy with the other airline stocks. Quotient Technology Inc. (QUOT) fell below the 50-day moving average. JPMorgan Chase & Co. (JPM/WS) released June card charge-offs which showed charge-offs largely improving (2.36% from 2.50% in May) while +30 day delinquencies were flat sequentially (1.14%) and +90-day delinquencies were down only slightly (0.57% from 0.58%).
Exhibit 3: Significant Detractors from Performance, 7/14/17 – 7/21/17
| Name | Type | Return |
| United Continental Holdings | Equity | -10.4% |
| Delta Air Lines Inc. | Equity | -5.2% |
| American Airlines Group Inc. | Equity | -4.3% |
| Quotient Technology Inc. | Equity | -3.4% |
| JP Morgan Chase & Co. - Warrants | Derivative | -3.0% |
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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