The Intellectual Investor: Income Strategy Weekly Updates

May 22, 2017

Income Opportunity Strategy Update for Week Ended 5/19/17

Frontier Rises on Insider Buys, While Alternative Asset Managers Decline on Light News

Last week, the Income Opportunity Strategy lost -0.36%, underperforming both the Merrill Lynch U.S. High Yield Master II Index’s 0.28% gain and the S&P 500’s -0.32% decline (Exhibit 1). The strategy ended the week up 6.49% YTD, or 215 basis points ahead of the high yield index and 75 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Income Opportunity Strategy Versus High Yield, Equity Indices, Through 5/19/171

Time Period Income Opportunity ML HY II S&P 500
Last Week (5/12 – 5/19) -0.36% 0.28% -0.32%
MTD -2.49% 0.48% 0.08%
QTD -1.08% 1.59% 1.10%
YTD 6.49% 4.34% 7.24%
Inception (annualized since 4/2/2009) 15.28% 12.74% 16.08%

Source: Bloomberg, Miller Value Partners

Four equities and a preferred comprised this week’s top five contributors (Exhibit 2). Frontier Communications (FTR) advanced as insiders scooped up 75,300 shares worth ~$100K despite the stock hitting an all-time low. Real estate investing firm Colony NorthStar (CLNS) rose after announcing the launch of a $754M securitized CMBS offering with additional sponsor Chatham Lodging Trust (CLDT). There was no price-changing news on Fortress Transportation & Infrastructure (FTAI) or Chimera Investment (CIM).

Exhibit 2: Significant Contributors to Performance, 5/12/17 – 5/19/17

Name Type Return
Frontier Communications Corp. 11.125% Preferred 17.2%
Frontier Communications Corp. Equity 20.7%
Fortress Transportation & Infrastructure Equity 3.1%
Colony NorthStar Equity 2.4%
Chimera Investment Corp. Equity 1.3%

Source: Miller Value Partners

Four equities and a preferred comprised this week’s top five detractors (Exhibit 3), though there was no apparent news behind any of the declines.

Exhibit 3: Significant Detractors from Performance, 5/12/17 – 5/19/17

Name Type Return
*Recently Added Security* Equity -9.9%
Carlyle Group Equity -3.6%
*Recently Added Security* Preferred -2.6%
Seaspan Corp. Equity -3.7%
Apollo Global Management Equity -1.5%

Source: Miller Value Partners

Did you know that we write this piece for Opportunity Equity as well? Check it out.

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 Income Opportunity Strategy performance, please click on the Income Opportunity Strategy 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 (includes LMM LLC and Miller Value Partners, LLC)

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