Last week, Opportunity Equity strategy declined -1.04%, underperforming the S&P 500’s 0.23% rise (Exhibit 1). The strategy ended the week up 21.08% YTD, or 915 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 8/4/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (7/28 - 8/4) | -1.04% | 0.23% |
| MTD | -0.18% | 0.30% |
| QTD | 0.37% | 2.37% |
| YTD | 21.08% | 11.93% |
| Inception (annualized since 12/30/99) | 6.99% | 5.04% |
Source: Bloomberg, Miller Value Partners
Quotient Technology Inc. (QUOT) reported strong Q2 results, with revenue matching consensus at $74M and EBITDA of $13M handily surpassing analyst estimates of $10M driven by lower SG&A and Retailer IQ transaction growth. The company increased 2017 guidance due to the acquisition of Crisp, which closed on 6/1/17 and announced Mir Aamir, current President and COO, will become CEO effective September 1st. The Apple Inc. (AAPL) C100 call options increased during the week after Apple announced positive third quarter results with revenues and GM coming in at the upper end of guidance ($45.4B vs. $43.5B-$45.5B guide and 38.5% vs. 37.5-38.5% guide). iPhone shipments were above consensus at 41.03M vs. 40.7M and the company provided guidance ahead of consensus for the 4th quarter with revenues of $49B-$52B (vs. $49.2B). There was minimal news on the other top contributors.
Exhibit 2: Significant Contributors to Performance, 7/28/17 – 8/4/17
| Name | Type | Return |
| Quotient Technology Inc. | Equity | 13.7% |
| Platform Specialty Products | Equity | 9.0% |
| Apple Inc. C100 1/18 | Derivative | 13.6% |
| Pulte Group Inc. | Equity | 5.1% |
| JPMorgan Chase & Co. - Warrants | Derivative | 4.4% |
Source: Miller Value Partners
RH (RH) and Valeant Pharmaceuticals International Inc. (VRX) fell below the 50-day moving average last week. Endurance International Group Holdings (EIGI) fell below the 50-day, 100-day and 200-day moving average last week after announcing revenue and adjusted EBITDA that beat expectations ($292M vs. $289M and $82.5M vs. $80.2M). The company raised 2017 guidance for revenue and adjusted EBITDA but disappointed by lowering 2017 FCF guidance to $140M from $151M. Pandora Media Inc. (P) fell below the 50-day moving average after announcing 2Q results which showed revenues and adjusted EBITDA beating ($377M vs. $367M and -$50M vs. -$55M) while total active users declined to 76M (2.7% YoY decline) and total listening hours declined to 5.22B (8% YoY decline). The company lowered 2017 revenue guidance to $1.45-1.5B from $1.5-1.65B with a large portion of the decline attributed to the sale of Ticketfly and the closure of Australia and New Zealand operations. The company also announced a strategy shift focused on broad customer acquisition rather than a more narrow focus on subscriptions. There was minimal news on Endo Pharmaceuticals Holdings Inc. (ENDP).
Exhibit 3: Significant Detractors from Performance, 7/28/17 – 8/4/17
| Name | Type | Return |
| RH | Equity | -18.5% |
| Valeant Pharmaceuticals International | Equity | -10.2% |
| Endurance International Group Holdings | Equity | -15.6% |
| Endo Pharmaceuticals Holdings | Equity | -14.8% |
| Pandora Media Inc. | Equity | -10.5% |
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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