Income Strategy Weekly Updates

September 27, 2021

Income Strategy Update for Week Ended 9/24/21

Pitney Bowes Gains as Long Term Guidance Affirmed, Debt Paydown While Detractors See Light News

Last week, the Income Strategy declined -0.43%, underperforming the ICE BofA Merrill Lynch High Yield Master II Index’s -0.17% loss as well as the S&P 500’s 0.52% increase. (Exhibit 1). The strategy ended the week up +27.15% YTD, or 2,219 basis points ahead of the high yield index and 728 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 9/24/211

Time Period Income Strategy ML HY II S&P 500
Last Week (9/17 – 9/24) -0.43% -0.17% 0.52%
MTD -2.01% 0.31% -1.40%
QTD -1.70% 1.21% 4.01%
YTD 27.15% 4.96% 19.87%
Inception (annualized since 4/2/2009) 13.63% 10.41% 17.10%

Source: Bloomberg, Miller Value Partners

Five equities comprised last week’s top five contributors. Pitney Bowes (PBI) presented at the Sidoti Conference, reiterating long-term E-commerce EBIT margins of 8%-12% and announcing the redemption of $72M of 2022 notes. Preferred Apartment Communities (APTS) announced it completed the acquisition of a 240-unit multifamily community in Washington, DC as part of the company’s strategy to boost its portfolio of suburban properties. OneMain Holdings (OMF) reported August net charge-offs of 3.37%, down 43bps sequentially while delinquencies rose modestly to 1.73%, though remain well below pre-pandemic levels. There was no price changing news on Chico’s FAS (CHS) or H&R Block (HRB).

Exhibit 2: Significant Contributors to Performance, 9/17/21 – 9/24/21

Name Type Return
Pitney Bowes Inc. Equity 6.5%
Preferred Apartment Communities, Inc. Equity 4.5%
OneMain Holdings Inc. Equity 2.9%
Chico’s FAS, Inc. Equity 3.8%
H&R Block, Inc. Equity 2.0%

Source: Miller Value Partners

There were three equities and two bonds comprising last week’s top five detractors. Debt of Geo Group (GEO) fell despite announcing six-month contract extension with the USMS for its 770-bed Western Region Detention Facility in San Diego. There was no price changing news on other top detractors.

Exhibit 3: Significant Detractors from Performance, 9/17/21 – 9/24/21

Name Type Return
The Chemours Co Equity -7.9%
Carlyle Group Inc. Equity -5.4%
GEO Group Inc. 5.875% 10/24 Bond -2.0%
Sculptor Capital Management Cl A Equity -3.6%
Teva Pharmaceutical 4.1 10/46 Bond -2.3%

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.

©2020 Miller Value Partners, LLC

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