Last week, Opportunity Equity strategy advanced 2.83%, outperforming the S&P 500’s 1.43% rise (Exhibit 1). The strategy ended the week up 16.89% YTD, or 473 basis points ahead of the S&P 500.
Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 9/1/171
| Time Period | Opportunity Equity | S&P 500 |
| Last Week (8/25 - 9/1) | 2.83% | 1.43% |
| MTD | 0.67% | 0.20% |
| QTD | -3.10% | 2.58% |
| YTD | 16.89% | 12.16% |
| Inception (annualized since 12/30/99) | 6.75% | 5.03% |
Source: Bloomberg, Miller Value Partners
Shares of Ziopharm Oncology (ZIOP) rose in sympathy with Gilead Sciences (GILD) acquisition of Kite Pharma (KITE) and closed the week above their 50,100 and 200-day moving averages. Intrexon Corp. (XON) through its exclusive licensing collaboration with Oragenics Inc. (OGEN), announced that they have started their Phase 2 clinical trial of AG013, an oral rinsing solution designed to treat oral mucositis in patients undergoing chemo-radiation for the treatment of head and neck cancer. Gilead Sciences (GILD) announced it has agreed to buy Kite Pharma (KITE) for $11.9Bn in an all cash deal that is expected to be accretive after year 3. The acquisition helps to diversify GILD’s portfolio as it will propel them into CAR-T therapy, which involves harvesting immune cells from a patient, re-engineering them to fight cancer and then reintroducing them to the patient. The stock was upgraded at several firms across the street, most notably Argus, who raised the stock from Hold to Buy with a new price target of $100, or 21.6% upside. Platform Specialty Products (PAH) advanced as Director, Ian G. H. Ashken, purchased 45,000 shares for approximately $494,000. RH (RH) rose in advance of this week’s Q2 earnings release.
Exhibit 2: Significant Contributors to Performance, 8/25/17 – 9/1/17
| Name | Type | Return |
| Ziopharm Oncology Inc. | Equity | 15.1% |
| Intrexon Corp. | Equity | 13.8% |
| Gilead Sciences Inc. | Equity | 13.5% |
| Platform Specialty Products Corp. | Equity | 10.6% |
| RH | Equity | 6.8% |
Source: Miller Value Partners
Valeant Pharmaceuticals (VRX) fell last week after Mizuho Securities reiterated their underperform rating and lowered their price target from $8 to $7, -46% below where it currently trades. The analyst believes falling margins in their Diversified segment and weakness in their Branded Rx business should make the company miss 2017 revenue and EBITDA guidance. The stock fell below its 100 and 200-day moving averages. Endo Pharmaceuticals (ENDP) announced that through one if its operating companies, Par Pharmaceuticals, it began shipping Vigabatrin, the generic version of Lundbeck’s Sabril. Vigabatrin just received final FDA approval and is currently the only generic version of Sabril on the market. MGIC Investment Corp (MTG) and JPMorgan Chase & Co. – Warrants (JPM) both fell below their 50-day moving averages. United Continental Holdings (UAL) fell on a note from Cowen & Co. stating that the firm could take a $265M hit from the effects of Hurricane Harvey.
Exhibit 3: Significant Detractors from Performance, 8/25/17 - 9/1/17
| Name | Type | Return |
| Valeant Pharmaceuticals Intl Inc. | Equity | -5.7% |
| Endo Pharmaceuticals Holdings Inc. | Equity | -3.9% |
| MGIC Investment Corp. | Equity | -2.3% |
| JPMorgan Chase & Co. - Warrant | Derivative | -2.1% |
| United Continental Holdings | Equity | -1.5% |
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, LLC
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