December 31, 2018

Income Strategy Update for Week Ended 12/28/18

Contributors See Light News While Alrosa Falls on Sberbank CIB Downgrade

Last week, the Income Strategy advanced 1.84%, outperforming the Merrill Lynch U.S. High Yield Master II Index’s 0.07% rise but underperforming the S&P 500’s 2.90% gain. (Exhibit 1). The strategy ended the week down -7.85% YTD, or 542 basis points behind the high yield index and 265 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 12/28/181

Time Period Income Strategy ML HY II S&P 500
Last Week (12/21 – 12/28) 1.84% 0.07% 2.90%
MTD -10.94% -2.35% -9.81%
QTD -17.15% -4.82% -14.26%
YTD -7.85% -2.43% -5.20%
Inception (annualized since 4/2/2009-11/30/18) 14.34% 11.08% 16.11%

Source: Bloomberg, Miller Value Partners

Equities comprised last week’s top five contributors (Exhibit 2). Greenhill (GHL) and Chimera Investment Corp (CIM) rose above closely watched technical levels. There was no price-changing news on Blackstone Group (BX), National CineMedia (NCMI), or New Residential Investment Corp (NRZ).

Exhibit 2: Significant Contributors to Performance, 12/21/18 – 12/28/18

Name Type Return
Greenhill & Co Equity 8.9%
Chimera Investment Corp Equity 7.1%
Blackstone Group LP Equity 5.5%
National CineMedia Equity 3.9%
New Residential Investment Corp Equity 4.0%

Source: Miller Value Partners

A smattering of asset types comprised last week’s top five detractors (Exhibit 3). Sberbank CIB downgraded Alrosa (ALRS RX) from “Buy” to “Hold” with a RUB 103 price target, 4.4% implied upside excluding the 11.3% dividend yield. There was no price-changing news on Tupperware Brands (TUP), Ascena Retail Group (ASNA), or Washington Prime Group (WPG).

Exhibit 3: Significant Detractors from Performance, 12/21/2018 – 12/28/18

Name Type Return
Alrosa PJSC Equity -1.8%
Tupperware Brands Equity -1.7%
*Recently Added Security Preferred -1.7%
Ascena Retail Group TL B 1L 8/22 Term Loan -0.9%
Washington Prime Group Equity -1.0%

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. Content may not be reprinted, republished or used in any manner without written consent from Miller Value Partners.

©2018 Miller Value Partners, LLC

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