MicroStrategy Gains on Earnings Beat and Crypto Rally, While OneMain Drops on Mixed Guidance

Last week, the Income Strategy’s representative account rose 0.86% (net of fees), outperforming the ICE BofA Merrill Lynch High Yield Master II Index’s 0.17% gain and underperforming the S&P 500’s 1.40% gain. (Exhibit 1). The strategy ended the week down -1.13% YTD, or 132 basis points behind the high yield index and 665 basis points behind the S&P 500.

Exhibit 1: Performance of Income Strategy Representative Account Net of Fees Versus High Yield, Equity Indices, Through 2/9/20241

Time Period Income Strategy Representative Account ICE BofA Master High Yield II Index S&P 500 Index
Last Week (2/2 – 2/9) 0.86% 0.17% 1.40%
MTD 1.01% 0.17% 3.77%
QTD -1.13% 0.19% 5.52%
YTD -1.13% 0.19% 5.52%
1 Year 5.60% 9.34% 25.18%
5 Year 4.31% 4.28% 15.10%
Inception (annualized since 2/28/2014) 3.62% 4.29% 12.60%
Source: Bloomberg, Miller Value Partners.

Four equities and one bond comprised last week’s top 5 contributors. MicroStrategy Inc 0.75% 12/15/2025 rose as the software company benefitted from a Bitcoin price rally last week that resulted in a 10.6% weekly gain for the prominent cryptocurrency, as well as an earnings report coming with the statement that MicroStrategy was committed to developing the Bitcoin network. Stellantis NV (STLA) rose in sympathy with other automakers last week after Ford (F) beat consensus expectations with its 4Q23 earnings report and provided strong FY24 guidance, signaling healthy demand. Shares of Jackson Financial (JXN) advanced above the stock’s 50-day moving average last week. Buckle (BKE) reported that January 2024 comparable same store net sales fell -17.4% Y/Y, while total net sales fell -4.5% Y/Y during the period. There was no price-changing news for Encore Wire (WIRE) last week.

Exhibit 2: Significant Contributors to Income Strategy Representative Account Performance, 01/26/24 – 02/02/24

Name Type
MicroStrategy Inc 0.75% 12/15/2025 Bond
Stellantis NV Equity
Jackson Financial Inc. Equity
The Buckle Inc. Equity
Encore Wire Corp. Equity
Source: Miller Value Partners.

Four equities and one bond comprised last week’s top 5 detractors. OneMain Holdings (OMF) reported 4Q23 Adjusted EPS of $1.39, -10.9% Y/Y, ahead of consensus of $1.37, and a net charge-offs ratio of 7.70%, +102bps Q/Q, slightly worse than consensus of 7.61%. New loan originations came in at $3.0B in the quarter, -13% Y/Y, due to the company’s credit box tightening and pricing actions, as the company’s front book, or loan originations after the company’s credit tightening in August 2022, now represent 65% of the company’s portfolio. Management provided FY24 guidance that calls for managed receivables organic growth of 4%, revenue growth of 7%, net charge-offs of 8.0% (vs. 7.5% in FY23), and an operating expense ratio of ~6.7% (vs. 7.0% in FY23), at the respective midpoints. Gray Television Inc 5.375% 11/15/2031 fell in sympathy with other local TV station owners last week after ESPN, Fox, and Warner Bros Discovery announced they were collaborating to create a shared sports-streaming service. Shares of Alliance Resource Partners (ARLP) declined below the stock’s 50-day moving average last week. There was no price-changing news for AT&T (T) or Vonovia SE (VNA GY) last week.

Name Type
AT&T Inc Equity
OneMain Holdings Inc. Equity
Gray Television 5.375% 11/15/2031 Bond
Alliance Resource Partners Equity
Vonovia SE Equity
Source: Miller Value Partners.