Last week, Opportunity Equity strategy gained 0.25%, outperforming the S&P 500’s 0.14% advance (Exhibit 1). The strategy ended the week up 20.93% YTD, or 1,144 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 7/7/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (6/30 - 7/7) | 0.25% | 0.14% |
| MTD | 0.25% | 0.14% |
| QTD | 0.25% | 0.14% |
| YTD | 20.93% | 9.49% |
| Inception (annualized since 12/30/99) | 7.01% | 4.93% |
Source: Bloomberg, Miller Value Partners
American Airlines (AAL) rose throughout the week on news that Qatar Airways remains interested in buying a piece of the company and is said to begin purchasing shares in the near future. Shares of United Continental Holdings (UAL) moved above their 50-day moving average. JP Morgan (JPM) shares rose in accordance with the fed funds rate hike. Delta Air Lines (DAL) provided strong 2Q final guidance where PRASM will come in at the high end of the previous outlook. The company also raised the lower end of its 2Q operating margin forecast to 18%-19%, from 17%-19%. In addition, Jet Airways is rumored to be in talks to sell a 24% stake in their company to Delta. There was no news on MGIC Investment Corp. (MTG).
Exhibit 2: Significant Contributors to Performance, 6/30/17 – 7/7/17
| Name | Type | Return |
| American Airlines Group | Equity | 5.4% |
| United Continental Holdings | Equity | 4.9% |
| JPMorgan Chase & Co. - Warrants | Derivative | 4.4% |
| Delta Air Lines Inc. | Equity | 3.2% |
| MGIC Investment Corp. | Equity | 2.9% |
Source: Miller Value Partners
Valeant Pharmaceuticals (VRX) fell as JP Morgan issued a note stating the company has a “long road to recovery”, citing limited signs of a turnaround in the company’s core franchises and leverage that remains elevated. The analyst believes the stock’s current valuation, on both peer comps and sum-of-the parts metrics, is expensive, and has a PT of $10, or 40% implied downside. Shares of Pandora (P) fell this week, despite a resumed overweight rating at Morgan Stanley with a PT of $12, or 38.1% above where shares currently trade. The analyst believes their recent Sirius XM investment will help shore up their balance sheet and allow them to focus on growing their advertising business. Genworth Financial (GNW) closed the week below its 50-day moving average. There was no news on RH (RH) or Wayfair, Inc. (W).
Exhibit 3: Significant Detractors from Performance, 6/30/17 – 7/7/17
| Name | Type | Return |
| Valeant Pharmaceuticals Intl. Inc. | Equity | -6.2% |
| RH | Equity | -2.9% |
| Wayfair, Inc. | Equity | -3.7% |
| Pandora Media Inc. | Equity | -4.6% |
| Genworth Financial Inc. | Equity | -3.2% |
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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