Income Strategy Weekly Update for 1/26/2024 – 2/2/2024

Stellantis Gains Technical Momentum After GM Earnings Beat, While Western Alliance Falls in Sympathy with Regional Banks on NYCB Concerns

Last week, the Income Strategy’s representative account ended flat (net of fees), underperforming the ICE BofA Merrill Lynch High Yield Master II Index’s 0.05% gain and underperforming the S&P 500’s 1.41% gain. (Exhibit 1). The strategy ended the week down -1.97% YTD, or 199 basis points behind the high yield index and 603 basis points behind the S&P 500.

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

Time Period	Income Strategy Representative Account	ICE BofA Master High Yield II Index	S&P 500 Index
Last Week (1/26 – 2/2)	0.00%	0.05%	1.41%
MTD	0.14%	0.00%	2.34%
QTD	-1.97%	0.02%	4.06%
YTD	-1.97%	0.02%	4.06%
1 Year	0.58%	7.49%	20.59%
5 Year	3.85%	4.28%	14.80%
Inception (annualized since 2/28/2014)	3.54%	4.28%	12.47%

Source: Bloomberg, Miller Value Partners.

Five equities comprised last week’s top 5 contributors. Shares of Stellantis NV (STLA) advanced above the stock’s 50-day moving average last week after rival automaker General Motors (GM) reported above-consensus 4Q23 results and guided for FY24 Adjusted EPS of $9.00, well ahead of consensus of $7.70. JP Morgan upgraded AT&T (T) to Overweight with a price target of $21, or ~17.8% upside from Friday’s closing price. The analysts expect the telecom giant to generate FCF of $17.4B in 2024, or a FCF yield of 13.6%, and point out AT&T’s ~12.0% relative valuation discount to Verizon on a forward P/E basis. There was no price-changing news for Buckle (BKE), Encore Wire (WIRE), or Boise Cascade (BCC) last week.

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

Name	Type
Stellantis NV	Equity
AT&T Inc.	Equity
The Buckle Inc.	Equity
Encore Wire Corp.	Equity
Boise Cascade Co.	Equity

Source: Miller Value Partners.

Five equities comprised last week’s top 5 detractors. Western Alliance Bancorp (WAL) fell in sympathy with other regional banks last week after New York Community Bancorp (NYCB) slashed its quarterly dividend by approximately 71% and reported a 4Q23 provision for credit losses of $552MM, significantly higher than the consensus estimate of $45MM, which reignited fears about the stability of the banking industry. Shares of Jackson Financial (JXN) declined below the stock’s 50-day moving average last week. Quad Graphics (QUAD) announced that it repurchased 492.4K shares of its common stock in 4Q23, bringing total FY23 share repurchases to 2.85MM shares for $12.6MM, or ~4.4% of the company’s market cap. There was no price-changing news for OneMain Holdings (OMF) or CTO Realty Growth (CTO) last week.

Name	Type
Western Alliance Bancorp	Equity
Jackson Financial Inc.	Equity
OneMain Holdings Inc.	Equity
CTO Realty Growth	Equity
Quad Graphics	Equity

Source: Miller Value Partners.

As of prior week’s market close unless otherwise stated.

¹The performance figures for the representative Income Strategy account reflect the deduction of investment management fees and certain other expenses. Returns greater than 1 year are annualized.

For additional information about Income Strategy performance, please click on the Income Strategy Composite Performance Disclosure. Past performance is no guarantee of future results.

Significant Contributors and Significant Detractors are based on holdings that had the greatest effect on representative account performance for the week. Holdings that have been in the portfolio 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. There is no guarantee that market trends discussed herein will continue. 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. Portfolio composition is shown as of a point in time and is subject to change without notice.