October 14, 2019

Opportunity Equity Update for Week Ended 10/11/19

Stitch Fix Inc. Crosses Above the 50-day While Eventbrite Falls Below the 50-day

Last week, the Opportunity Equity strategy rose 1.61%, outperforming the S&P 500’s 0.66% fall (Exhibit 1). The strategy ended the week up 13.31% YTD, or 707 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 10/11/191

Time Period Opportunity Equity S&P 500
Last Week (10/4 – 10/11) 1.61% 0.66%
MTD 0.26% -0.14%
QTD 0.26% -0.14%
YTD 13.31% 20.38%
Inception (annualized since 6/26/00) 6.62% 5.82%

Source: Bloomberg, Miller Value Partners

Stitch Fix Inc. (SFIX) and American Airlines Group Inc. (AAL) rose above the 50-day moving average while ADT Inc. (ADT) crossed above the 200-day moving average. American Airlines released an updated 3Q outlook. The company increased the bottom end of its pre-tax margin guidance range to 6.5-7.5% from 5.5-7.5% with revenue per available seat mile (RASM) tightened to 1.5-2.5% from 1-3%. American also announced the removal of the MAX aircraft from its schedules through January 15th (previously it was December 3rd). There was minimal company specific news on Bausch Health Companies Inc. (BHC) and RH (RH).

Exhibit 2: Significant Contributors to Performance, 10/4/19 – 10/11/19

Name Type Return
Bausch Health Companies Inc. Equity 8.0%
Stitch Fix Inc. Equity 10.9%
RH Equity 5.3%
ADT Inc. Equity 5.3%
American Airlines Group Inc. Equity 5.9%

Source: Miller Value Partners

Eventbrite Inc. (EB) fell below the 50-day moving average. Nevakar Inc. announced that it entered into a $17.5M product financing agreement with an affiliate of H.I.G. Capital Partners for the continued development of five sterile injectable products. As part of a previously announced agreement, Endo International (ENDP) has the ability to launch and distribute the products upon approval from the FDA. Raymond James raised their price target on Lennar Corp. (LEN) to $65, upside of 11%. Credit Suisse out with a report on Brighthouse Financial Inc. (BHF) that lowers EPS estimates and leaves the company with an underperform rating and a price target of $22, downside of 40%. There was minimal news on Medifast Inc (MED).

Exhibit 3: Significant Detractors from Performance, 10/4/19 – 10/11/19

Name Type Return
Medifast Inc. Equity -5.7%
Eventbrite Inc. Equity -4.6%
Endo International Equity -3.0%
Lennar Corp. Equity -1.6%
Brighthouse Financial Inc. Equity -1.4%

Source: Miller Value Partners

1The performance figures reflect the results of a representative account net of management fee and certain other expenses. For important additional information about Opportunity Equity performance, please click on the Opportunity Equity 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.

©2019 Miller Value Partners, LLC

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