December 3, 2018

Opportunity Equity Update for Week Ended 11/30/18

Amazon Gains After 7th Annual re:Invent Conference While Mallinckrodt Falls on Citron Tweet

Last week, the Opportunity Equity strategy gained 3.34%, underperforming the S&P 500’s 4.91% rise (Exhibit 1). The strategy ended the week up 11.12% YTD, or 601 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 11/30/181

Time Period Opportunity Equity S&P 500
Last Week (11/23 – 11/30) 3.34% 4.91%
MTD 2.24% 2.04%
QTD -9.83% -4.94%
YTD 11.12% 5.11%
Inception (annualized since 6/26/00) 7.41% 5.58%

Source: Bloomberg, Miller Value Partners Inc. (AMZN) gained over the week after hosting its 7th annual AWS re:Invent conference. The company highlighted the fact that Aurora customer base more than doubled for the third consecutive year, while also unveiling a number of new database services. Delta Air Lines Inc. (DAL) continued to rise on lower oil prices. Wells Fargo initiated on RH (RH) with an outperform rating and a price target of $145, upside of 25%. Newell Brands Inc. (NWL) gained over the week after announcing the appointment of Christopher Peterson as EVP and CFO effective December 3rd. He will be replacing current CFO, Ralph Nicoletti, who had previously announced his intent to retire at the end of the year. Celgene (CELG) gained ahead of the American Society of Hematology (ASH) meeting where CELG will present updates on multiple pipeline programs.

Exhibit 2: Significant Contributors to Performance, 11/23/18 – 11/30/18

Name Type Return Inc. Equity 12.5%
Delta Air Lines Inc. Equity 6.2%
RH Equity 5.5%
Newell Brands Inc. Equity 8.7%
Celgene Corp. Equity 8.4%

Source: Miller Value Partners

Mallinckrodt (MNK) continued to decline over the week after Citron Research issued a tweet with a link to an article in Clinical Journal of the American Society of Nephrology that showed Acthar showed little efficacy in pediatric nephrotic syndrome patients. This was an investigator-sponsored study with results published in May 2018 and looked at an indication for which Acthar is not used. Mizuho lowered its price target for Endo International (ENDP) to $15 from $18 reiterating a neutral rating with an upside of 25%. Teva Pharmaceuticals (TEVA) announced the release of limited doses of the FDA-approved generic version of EpiPen Auto-Injector. Teva also announced the approval of Truxima, the first biosimilar to Roche’s Rituxan to be approved in the US to treat non-Hodgkin’s lymphoma. There was minimal news on GTY Technology Holdings (GTYHU) and Intrexon Corp. (XON).

Exhibit 3: Significant Detractors from Performance, 11/23/18 – 11/30/18

Name Type Return
Mallinckrodt Equity -10.1%
Endo International Equity -4.8%
GTY Technology Holdings Equity -6.8%
Teva Pharmaceuticals Equity -1.8%
Intrexon Corp. 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.

©2018 Miller Value Partners, LLC

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