November 18, 2019

Opportunity Equity Update for Week Ended 11/15/19

Tivity Gains on 3Q Results While American Falls on Continued MAX Grounding

Last week, the Opportunity Equity strategy rose 1.54%, outperforming the S&P 500’s 0.94% gain (Exhibit 1). The strategy ended the week up 26.96% YTD, or 27 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 11/15/191

Time Period Opportunity Equity S&P 500
Last Week (11/8 – 11/15) 1.54% 0.94%
MTD 4.57% 2.87%
QTD 12.34% 5.10%
YTD 26.96% 26.69%
Inception (annualized since 6/26/00) 7.21% 6.07%

Source: Bloomberg, Miller Value Partners

Tivity Health Inc. (TVTY) crossed above the 200-day moving average after reporting 3Q results which were mixed. Total revenue came in at $304M ahead of consensus of $301M with healthcare revenues growing 5.6% YoY and the nutrition business declining 9.6%, as expected. Total adjusted EBITDA was $57M compared to consensus of $63M leading to adjusted EPS of $0.46 below expectations of $0.58 due to higher investment in the Nutrition business. Management reaffirmed their full year 2019 guidance and announced that they had paid down another $105M in debt satisfying its March 2021 debt reduction requirement. The company also announced the extension of the UnitedHealth group business for another two years. Peloton Interactive Inc. (PTON) gained over the week as rumors emerged of the company introducing a cheaper treadmill and rowing machine next year along with exploring apps for Amazon’s Fire TV and the apple watch. Teva Pharmaceuticals (TEVA) gained after announcing the refinancing of $1.5B of bonds maturing in 2021. RH (RH) moved higher as Berkshire Hathaway disclosed a new 6.5% position in the company’s stock. There was minimal news on Bausch Health Companies Inc. (BHC).

Exhibit 2: Significant Contributors to Performance, 11/8/19 – 11/15/19

Name Type Return
Tivity Health Inc. Equity 15.5%
Bausch Health Companies Inc. Equity 8.7%
Peloton Interactive Inc. Equity 15.8%
Teva Pharmaceuticals Equity 9.5%
RH Equity 7.7%

Source: Miller Value Partners

American Airlines Group Inc. (AAL) fell after they announced that they are extending the grounding of their Boeing 737 MAX planes until at least the first week of March. Cowen initiated coverage of the name with a sell rating and a price target of $27, -6% downside. Genworth Financial Inc. (GNW) fell below the 200-day moving average while Inc. (AMZN) fell below the 50-day moving average. Nike announced that they will be pulling their products from Amazon, ending a pilot program which began in 2017. There was minimal news on Eventbrite Inc. (EB) and Discovery Inc. (DISCA).

Exhibit 3: Significant Detractors from Performance, 11/8/19 – 11/15/19

Name Type Return
American Airlines Group Inc. Equity -6.2%
Eventbrite Inc. Equity -6.8%
Genworth Financial Inc. Equity -3.5% Inc. Equity -2.6%
Discovery Inc. Equity -3.8%

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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