July 2, 2018

Income Strategy Update for Week Ended 6/29/18

Seaspan Advances on Maintained Dividend While Carlyle, Abercrombie & Maiden Fall Below Technical Levels

Last week, the Income Strategy declined -0.89% underperforming the Merrill Lynch U.S. High Yield Master II Index’s -0.54% fall, but outperforming the S&P 500’s -1.31% loss (Exhibit 1). The strategy ended the week up 10.81% YTD, or 1,075 basis points ahead of the high yield index and 816 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Income Strategy Versus High Yield, Equity Indices, Through 6/29/181

Time Period Income Strategy ML HY II S&P 500
Last Week (6/22- 6/29) -0.89% -0.54% -1.31%
MTD 2.65% 0.33% 0.62%
QTD 11.89% 0.98% 3.43%
YTD 10.81% 0.06% 2.65%
Inception (annualized since 4/2/2009-5/31/18) 15.71% 11.70% 16.68%

Source: Bloomberg, Miller Value Partners

Three equities and two bonds comprised last week’s top five contributors (Exhibit 2). Seaspan Corp (SSW) maintained their $0.125/share dividend (5.0% annualized yield). Jernigan Capital (JCAP) rose above closely watched technical levels as Director Marc Decker purchased 1,340 shares for $18.63, or roughly $25,000. There was no price-changing news on EIG Investors Corp (EIGI).

Exhibit 2: Significant Contributors to Performance, 6/22/18 – 6/29/18

Name Type Return
Seaspan Corp Equity 11.9%
Jernigan Capital, Inc Equity 3.9%
EIG Investors Corp 10.875% 2/24 Bond 0.8%

Source: Miller Value Partners

Five equities comprised last week’s top five detractors (Exhibit 3). Carlyle Group (CG), Abercrombie & Fitch (ANF), and Maiden Holdings (MHLD) fell below closely watched technicals. CBL & Associates (CBL) fell despite Goldman Sachs raising their price target to $5.80 (4.7x 2019E AFFO), 5.5% above where it currently trades, excluding the 14.6% dividend, citing a resurgence of investor optimism.

Exhibit 3: Significant Detractors from Performance, 6/22/2018 – 6/29/18

Name Type Return
Carlyle Group LP Equity -5.3%
Abercrombie & Fitch Co Equity -12.4%
Maiden Holdings Ltd Equity -6.0%
CBL & Associates Properties Equity -6.8%

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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