April 2, 2018

Income Strategy Update for Week Ended 3/29/18

Maiden Holdings Advances on Industry M&A Talk While Hi-Crush, Apollo Fall Below Closely Watched Technicals

Last week, the Income Strategy advanced 0.34%, outperforming the Merrill Lynch U.S. High Yield Master II Index’s 0.09% gain, but underperforming the S&P 500’s 2.05% rise (Exhibit 1). The strategy ended the week down -1.20% YTD, or 27 basis points behind the high yield index and 44 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 3/29/181

Time Period Income Strategy ML HY II S&P 500
Last Week (3/23 – 3/29)  0.34% 0.09% 2.05%
MTD -0.62% -0.64% -2.54%
QTD -1.20% -0.93% -0.76%
YTD -1.20% -0.93% -0.76%
Inception (annualized since 4/2/2009-2/28/18) 15.14% 11.96% 17.18%

Source: Bloomberg, Miller Value Partners

Five equities comprised last week’s top five contributors (Exhibit 2). Reinsurer Maiden Holdings (MHLD) rose in sympathy with the insurance industry as peers Aspen Insurance (AHL) and Hanover Insurance (THG) announced they are exploring strategic options. CenturyLink (CTL) and Washington Prime Group (WPG) rose above their 100-day moving averages; Temasek Holdings also reported a 9.7% stake in CenturyLink. There was no price-changing news on Abercrombie & Fitch (ANF).

Exhibit 2: Significant Contributors to Performance, 3/23/18 – 3/29/18

Name Type Return
 Abercrombie & Fitch Co Equity 4.1%
 Maiden Holdings Ltd Equity 5.6%
 CenturyLink Inc Equity 5.9%
Washington Prime Group Equity 6.2%

Source: Miller Value Partners

A smattering of asset types comprised last week’s top five detractors (Exhibit 3), though there was no apparent news on any of the names; Hi-Crush Partners (HCLP) and Apollo Global Management (APO) both fell below closely watched technical levels.

Exhibit 3: Significant Detractors from Performance, 3/23/18 – 3/29/18

Name Type Return
 Hi-Crush Partners LP Equity -9.0%
AmTrust Financial Services 6.95% Preferred -4.8%
 Frontier Communications Corp 10.5% 9/22 Bond -3.4%
 Triangle Capital Corp Equity -2.3%
 Apollo Global Management LLC Equity -1.8%

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 results of a representative account net of management fee 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.

©2018 Miller Value Partners, LLC

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