December 18, 2017

Income Strategy Update for Week Ended 12/15/17

Energy Transfer Partners Advances on Rover Pipeline Approval While Detractors See Light News

Last week, the Income Strategy gained 0.12%, outperforming the Merrill Lynch U.S. High Yield Master II Index’s 0.02% rise, but underperforming the S&P 500’s 0.95% advance (Exhibit 1). The strategy ended the week up 14.59% YTD, or 735 basis points ahead of the high yield index and 727 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 12/15/171

Time Period Income Strategy ML HY II S&P 500
Last Week (12/8 – 12/15) 0.12% 0.02% 0.95%
MTD 1.19% 0.06% 1.14%
QTD -0.35% 0.20% 6.67%
YTD 14.59% 7.24% 21.86%
Inception (annualized since 4/2/2009) 15.17% 12.21% 16.65%

Source: Bloomberg, Miller Value Partners

Five equities comprised last week’s top five contributors (Exhibit 2). Tudor Pickering upgraded Energy Transfer Partners (ETP) from “Hold” to “Buy” and currently has a $31 price target, 73.4% above where it currently trades. Further, the company announced approval from the Federal Energy Regulatory Commission (FERC) to place Phase 1B of the Rover Pipeline into service, bringing the 713 mile pipeline closer to its 3.25-billion-cubic-feet-per-day capacity. Arlington Asset Investment (AI) closed the week above its 100-day moving average. There was no price changing news on Maiden Holdings (MHLD), Triangle Capital (TCAP), or National CineMedia (NCMI).

Exhibit 2: Significant Contributors to Performance, 12/8/17 – 12/15/17

Name Type Return
Maiden Holdings Ltd Equity 5.2%
Triangle Capital Corp Equity 3.7%
National CineMedia Equity 4.7%
Energy Transfer Partners LP Equity 6.3%
Arlington Asset Investment Corp Equity 3.8%

Source: Miller Value Partners

Five equities comprised last week’s top five detractors (Exhibit 3). BGC Partners (BGCP), Greenhill & Co (GHL), and Carlyle Group (CG) all fell below their 50-day moving averages. There was no price-changing news on Abercrombie & Fitch (ANF) or Blackstone Group (BX).

Exhibit 3: Significant Detractors from Performance, 12/8/17 – 12/15/17

Name Type Return
Abercrombie & Fitch Co Equity -7.2%
BGC Partners Equity -7.5%
Greenhill & Co Bond -4.9%
Carlyle Group LP Equity -1.8%
Blackstone Group LP Equity -2.4%

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 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.

©2017 Miller Value Partners, LLC

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