June 25, 2018

Income Strategy Update for Week Ended 6/22/18

National CineMedia Advances on Remaining AMC Sale While Jernigan Capital Falls Below Technical Levels

Last week, the Income Strategy advanced 1.75% outperforming both the Merrill Lynch U.S. High Yield Master II Index’s -0.06% fall and the S&P 500’s -0.87% decline (Exhibit 1). The strategy ended the week up 11.81% YTD, or 1,121 basis points ahead of the high yield index and 780 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 6/22/181

Time Period Income Strategy ML HY II S&P 500
Last Week (6/15- 6/22) 1.75% -0.06% -0.87%
MTD 3.57% 0.87% 1.95%
QTD 12.90% 1.53% 4.80%
YTD 11.81% 0.60% 4.01%
Inception (annualized since 4/2/2009-5/31/18) 15.71% 11.70% 16.68%

Source: Bloomberg, Miller Value Partners

Five equities comprised last week’s top five contributors (Exhibit 2). National CineMedia (NCMI) advanced on news that Cineworld Group (CINE LN) & Cinemark Holdings (CNK) have agreed to acquire the remaining 21.5M shares of NCMI currently owned by AMC Entertainment (AMC) at a price of $7.30. The deal removes a significant sale overhang which had the potential to remain in place until June 2019 and shows support for the long-term confidence in the cinema advertising business model. CBL & Associates (CBL) moved above its 200-day moving average on a bullish note from JPMorgan citing the U.S. REIT group as poised for a breakout in 2H18 on broad-based CRE demand, positive rental growth, stable occupancies, and compelling valuations. Abercrombie & Fitch (ANF) rose on retail optimism stemming from the Global Consumer Conference, where companies remain confident on consumer health being at a twenty-year high, while margins and FCF are tracking higher. There was no price-changing news on Greenhill & Co (GHL) or CYS Investments (CYS).

Exhibit 2: Significant Contributors to Performance, 6/15/18 – 6/22/18

Name Type Return
National CineMedia Equity 9.7%
CBL & Associates Properties Equity 15.5%
Greenhill & Co Equity 6.4%
CYS Investments Equity 5.4%
Abercrombie & Fitch Co Equity 10.2%

Source: Miller Value Partners

Five equities comprised last week’s top five detractors (Exhibit 3), though there was no apparent news that drove any of the moves, except Jernigan Capital (JCAP), which fell below closely watched technical levels.

Exhibit 3: Significant Detractors from Performance, 6/15/2018 – 6/22/18

Name Type Return
Maiden Holdings Ltd Equity -2.9%
Apollo Global Management LLC Equity -1.0%
Blackstone Group LP Equity -2.2%
Jernigan Capital Inc 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 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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