Income Strategy Weekly Updates

June 27, 2022

Income Strategy Update for Week Ended 6/24/22

Contributors Saw Light News, While Pitney Bowes Falls on E-commerce Divestiture

Last week, the Income Strategy rose 2.05%, outperforming the ICE BofA Merrill Lynch High Yield Master II Index’s 0.64% gain and underperforming the S&P 500’s 6.46% gain. (Exhibit 1). The strategy ended the week down -22.82% YTD, or 1,046 basis points behind the high yield index and 551 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 6/24/221

Time Period Income Strategy ML HY II S&P 500
Last Week (6/17 – 6/24) 2.05% 0.64% 6.46%
MTD -9.72% -4.99% -5.22%
QTD -14.16% -8.22% -13.33%
YTD -22.82% -12.36% -17.31%
Inception (annualized since 4/2/2009) 10.68% 8.74% 15.04%

Source: Bloomberg, Miller Value Partners

Five equities comprised last week’s top 5 contributors. There was no price-changing news for Organon (OGN), Viatris (VTRS), H&R Block (HRB), Lazard (LAZ), or OneMain Holdings (OMF) last week.

Exhibit 2: Significant Contributors to Performance, 6/17/22 – 6/24/22

Name Type Return
Organon & Co. Equity 8.1%
Viatris Inc Equity 4.8%
H&R Block, Inc. Equity 5.5%
Lazard Ltd Equity 9.5%
OneMain Holdings Inc Equity 5.8%

Source: Miller Value Partners

Four equities and one bond comprised last week’s top 5 detractors. Pitney Bowes Inc 7.25% 3/2029 fell last week on the announcement that it was selling its cross-border e-commerce solutions business, ‘Borderfree’, for $100 million to Global-e Online (GLBE), an Israeli-based e-commerce platform. Despite the market’s negative reaction to the deal, the transaction values Borderfree at 2.5x expected FY22 revenues of $40 million and provides Pitney Bowes with a meaningful boost in liquidity. Additionally, the deal includes a strategic partnership, under which Pitney Bowes will provide logistics services to Global-e and its customers and in turn Pitney Bowes will receive access to the cross-border solutions offered on the Global-e platform. There was no price-changing news for Vale SA (VALE), Quad Graphics (QUAD), or Jackson Financial (JXN) last week.

Exhibit 3: Significant Detractors from Performance, 6/17/22 – 6/24/22

Name Type Return
Vale S.A. Equity -4.9%
Quad Graphics Equity -13.8%
Jackson Financial Inc. Equity -3.7%
Pitney Bowes Inc. 7.25% 3/2029 Bond -1.7%

Source: Miller Value Partners

Check out the weekly update for Opportunity Equity. Click to Read.

1The performance figures reflect the results of a representative account net of management fees and certain other expenses. For important additional information about Income Strategy performance, please click on the Income 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. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners. Portfolio composition is shown as of a point in time and is subject to change without notice.

©2022 Miller Value Partners, LLC

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