November 25, 2019

Opportunity Equity Update for Week Ended 11/22/19

Discovery Gains on Malone Purchase While Qualcomm Declines on Disappointing Guidance

Last week, the Opportunity Equity strategy rose 1.58%, outperforming the S&P 500’s -0.29% loss (Exhibit 1). The strategy ended the week up 28.97% YTD, or 264 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 11/22/191

Time Period Opportunity Equity S&P 500
Last Week (11/15 – 11/22) 1.58% -0.29%
MTD 6.22% 2.57%
QTD 14.12% 4.79%
YTD 28.97% 26.33%
Inception (annualized since 6/26/00) 7.29% 6.05%

Source: Bloomberg, Miller Value Partners

Peloton Interactive Inc. (PTON) rose over the week as JPM reiterated their overweight rating and price target of $34, 16% upside. Discovery Inc. (DISCA) shares climbed after John Malone purchased $74.8M worth of stock and later noted on CNBC that the stock is dramatically undervalued. ADT Inc. (ADT) continued to rise as Imperial Capital published a positive note on the name reiterating their outperform rating and $11 price target, 27% upside. Medifast Inc. (MED) gained over the week after it disclosed that activist investor Engaged Capital took a 15% stake in the company. Later in the week the company’s Board announced its adoption of a limited duration shareholder rights plan. There was minimal news on Eventbrite Inc. (EB).

Exhibit 2: Significant Contributors to Performance, 11/15/19 – 11/22/19

Name Type Return
Peloton Interactive Inc. Equity 7.8%
Discovery Inc. Equity 9.5%
Eventbrite Inc. Equity 8.6%
ADT Inc. Equity 3.6%
Medifast Inc. Equity 8.1%

Source: Miller Value Partners

Qualcomm Inc. (QCOM) hosted their analyst day last week where management spoke positively about the forthcoming 5G opportunity; however, the company provided new 3-year targets for revenue growth and operating margins which disappointed. The company guided for revenue in its chipset business (QCT) to grow 10% with revenue from its licensing business (QTL) expected to grow low-single digits. The company expects operating margins of +20% for QCT and +70% for QTL. Quotient Technology Inc. (QUOT) was raised to a buy rating at Dougherty & Co. with a price target of $14, 34% upside. Micron Technology Inc. (MU) crossed below the 50-day moving average. NXP Semiconductors (NXPI) announced that its board of directors had authorized the resumption of its buyback program in 2020, authorizing up to $2B in repurchases (~6% of shares outstanding). There was minimal news on Bausch Health Companies Inc. (BHC).

Exhibit 3: Significant Detractors from Performance, 11/15/19 – 11/22/19

Name Type Return
Bausch Health Companies Inc. Equity -3.2%
Qualcomm Inc. Equity -6.5%
Quotient Technology Inc. Equity -3.5%
Micron Technology Inc. Equity -3.9%
NXP Semiconductors Equity -1.9%

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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