December 16, 2019

Opportunity Equity Update for Week Ended 12/13/19

Genworth Gains on Canadian Sale Approval While Tivity Declines on Dawn’s Surprise Departure

Last week, the Opportunity Equity strategy gained 0.67%, underperforming the S&P 500’s 0.77% gain (Exhibit 1). The strategy ended the week up 33.79% YTD, or 490 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 12/13/191

Time Period Opportunity Equity S&P 500
Last Week (12/6 – 12/13) 0.67% 0.77%
MTD 0.67% 0.98%
QTD 18.38% 6.91%
YTD 33.79% 28.89%
Inception (annualized since 6/26/00) 7.47% 6.14%

Source: Bloomberg, Miller Value Partners

Genworth Financial Inc. (GNW) crossed above the 100-day moving average after receiving approval of the sale of their Canadian Mortgage Insurance business to Brookfield Business Partners. JPMorgan upgraded Bausch Health Companies Inc. (BHC) to overweight from neutral with a price target of $38, upside of 23%. Stitch Fix Inc. (SFIX) crossed above the 200-day moving average after reporting strong FY1Q20 results. The company reported revenue of $444.8M ahead of consensus of $441.1M leading to EBITDA of $5.13M beating the Street at -$5.5M and ending with 3.42M active clients vs. 3.4M expected. The company reiterated FY20 revenue guidance of $1.9-1.93B but increased FY20 EBITDA guidance to $18-32M from $10-30M previously. The company guided for FY2Q20 revenue of $447-455M compared to the Street at $456M and EBITDA of $10-15M vs. the Street at $10.1M. Micron Technology Inc. (MU) gained over the week as a number of analysts posted FY1Q preview notes. The company reports this week. There was minimal news on Brighthouse Financial Inc. (BHF).

Exhibit 2: Significant Contributors to Performance, 12/6/19 – 12/13/19

Name Type Return
Genworth Financial Inc. Equity 11.4%
Bausch Health Companies Inc. Equity 6.4%
Stitch Fix Inc. Equity 7.4%
Brighthouse Financial Inc. Equity 5.7%
Micron Technology Inc. Equity 6.8%

Source: Miller Value Partners

Tivity Health Inc. (TVTY) declined over the week after announcing the departure of Dawn Zier, President and COO (and former Nutrisystem CEO). RH (RH) declined over the week as a number of insiders sold shares including Gary Friedman, CEO, who sold 500k shares (he still owns 28% of the company) and Jack Preston, CFO, who sold 13.3k shares. Ziopharm Oncology Inc. (ZIOP) showed pre-clinical data of rapid personalized manufacture (RPM) with T-cells expressing T-cell receptor (TCR) and membrane bound IL-15 showing better anti-tumor effects compared with TCR-modified T-cells alone. Endo International (ENDP) received approval and launched a generic version of Afinitor tablets which is used in cancer treatment. Facebook Inc. (FB) declined over the week as the Wall Street Journal reported that the FTC is considering seeking a preliminary injunction against Facebook over antitrust concerns related to how its products interact.

Exhibit 3: Significant Detractors from Performance, 12/6/19 – 12/13/19

Name Type Return
Tivity Health Inc. Equity -14.7%
RH Equity -9.4%
Ziopharm Oncology Inc. Equity -4.5%
Endo International Equity -4.3%
Facebook Inc. Equity -3.5%

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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