Income Strategy Weekly Updates

January 24, 2022

Income Strategy Update for Week Ended 1/21/22

British American Tobacco PLC Gains After Jefferies Increases Price Target While Stronghold Digital Mining Falls in Sympathy with Bitcoin

Last week, the Income Strategy declined -4.47%, underperforming the ICE BofA Merrill Lynch High Yield Master II Index’s -0.71% loss and outperforming the S&P 500’s -5.67% loss. (Exhibit 1). The strategy ended the week down -3.39% YTD, or 187 basis points behind the high yield index and 427 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 1/21/221

Time Period Income Strategy ML HY II S&P 500
Last Week (1/14 – 1/21) -4.74% -0.71% -5.67%
MTD -3.39% -1.52% -7.66%
QTD -3.39% -1.52% -7.66%
YTD -3.39% -1.52% -7.66%
Inception (annualized since 4/2/2009) 13.06% 10.03% 16.58%

Source: Bloomberg, Miller Value Partners

Three equities comprised last week’s contributors. British American Tobacco PLC (BATS LN) rose after Jefferies increased its price target to 3,900 pence per share from 3,769 pence per share citing the potential for a near-term rerating along with sentiment turning positive for reduced-risk products. Vale SA (VALE) rose after it was reported that BHP Group (BHP) was positioning itself to return to M&A with Vale SA’s base-metal unit as a potential target. There was no company specific news for GEO Group Inc 5.125% 4/23.

Exhibit 2: Significant Contributors to Performance, 1/14/22 – 1/21/22

Name Type Return
British American Tobacco PLC Equity 2.5%
Vale S.A. Equity 1.4%
GEO Group Inc 5.125% 4/23 Bond 0.3%

Source: Miller Value Partners

Five equities comprised last week’s top five detractors. Stronghold Digital Mining (SDIG) fell in sympathy with Bitcoin. Sculptor Capital Management (SCU) fell below closely watched technical levels in conjunction with the equity market pullback. OneMain Holdings Inc (OMF) fell after JPMorgan cut its price target for the company from $64 per share to $56 per share. There was no major company-specific news for The Chemours Co (CC) and Pitney Bowes Inc (PBI).

Exhibit 3: Significant Detractors from Performance, 1/14/22 – 1/21/22

Name Type Return
Stronghold Digital Mining Equity -21.4%
The Chemours Co Equity -7.3%
Pitney Bowes Inc Equity -12.4%
Sculptor Capital Management Equity -10.0%
OneMain Holdings Inc Equity -7.0%

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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