Income Strategy Weekly Updates

March 27, 2023

Income Strategy Update for Week Ended 03/24/23

HeidelbergCement Gains on Dividend Raise, While Chico’s Falls on Technical Reversal

Last week, the Income Strategy‘s representative account fell -0.80% (net of fees), underperforming the ICE BofA Merrill Lynch High Yield Master II Index’s 0.33% gain and underperforming the S&P 500’s 1.41% gain. (Exhibit 1). The strategy ended the week down -7.07% YTD, or 892 basis points behind the high yield index and 1093 basis points behind the S&P 500.

Exhibit 1: Performance of Income Strategy Representative Account Net of Fees Versus High Yield, Equity Indices, Through 3/24/231

Time Period Income Strategy Representative Account ML HY II S&P 500
Last Week (3/17- 3/24) -0.80% 0.33% 1.41%
MTD -10.56% -0.70% 0.16%
QTD -7.07% 1.85% 3.86%
YTD -7.07% 1.85% 3.86%
1 Year -20.74% -4.45% -10.63%
5 Year 1.02% 2.71% 10.87%
Inception (annualized since 2/28/14) 1.81% 3.44% 10.82%

Source: Bloomberg, Miller Value Partners. Visit the Strategy page for Income Strategy performance through the most current month end period.

Four equities and one bond comprised last week’s top 5 contributors. HeidelbergCement AG (HEI GY) gained after management declared an annual dividend of €2.60/share, which represents an increase of 8.3% Y/Y and implies a yield of 4.2%. Alliance Resource Partners (ARLP) rose after CEO Joseph Craft III purchased 148.7K shares worth of company stock for $2.7MM. There was no price-changing news for CTO Realty Growth (CTO) or MicroStrategy, Inc. 6.125% 6/15/2028 last week.

Exhibit 2: Significant Contributors to Income Strategy Representative Account Performance, 3/17/23 – 3/24/23

Name Type
HeidelbergCement AG Equity
CTO Realty Growth, Inc. Equity
MicroStrategy, Inc. 6.125% 6/15/2028 Bond
Alliance Resource Partners Equity

Source: Miller Value Partners. 

Five equities comprised last week’s top 5 detractors. Shares of Chico’s FAS (CHS) declined after the stock fell below its respective 50-day, 100-day, and 200-day moving averages last week. Vale SA (VALE) fell in sympathy with iron ore prices, which have dropped recently on increasing concerns over Chinese steel demand. Iron ore, which is an essential raw material for steel production, has been negatively impacted by the recent increases in Chinese steel stockpiles, signaling the potential for lower future iron ore demand from Chinese steel producers. There was no price-changing news for B Riley Financial (RILY) or Medifast (MED) last week.

Exhibit 3: Significant Detractors from Income Strategy Representative Account Performance, 3/17/23 – 3/24/23

Name Type
Chico’s FAS, Inc. Equity
B. Riley Financial, Inc. Equity
Vale S.A. Equity
Medifast, Inc. Equity

Source: Miller Value Partners.

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

As of prior week’s market close unless otherwise stated.

1The performance figures for the representative Income Strategy account reflect the deduction of investment management fees and certain other expenses. Returns greater than 1 year are annualized.

For additional information about Income Strategy performance, please click on the Income Strategy Composite Performance Disclosure. Past performance is no guarantee of future results.

2Significant Contributors and Significant Detractors are based on holdings that had the greatest effect on representative account performance for the week. Holdings that have been in the portfolio 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. There is no guarantee that market trends discussed herein will continue. 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. 

©2023 Miller Value Partners, LLC

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