January 28, 2019

Opportunity Equity Update for Week Ended 1/25/19

Semis Higher on Earnings While Quotient Lower on Lower Preliminary 4Q Revenues

Last week, the Opportunity Equity strategy lost -0.15%, outperforming the S&P 500’s -0.21% decline (Exhibit 1). The strategy ended the week up 16.08% YTD, or 967 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 1/25/191

Time Period Opportunity Equity S&P 500
Last Week (1/18 – 1/25) -0.15% -0.21%
MTD 16.08% 6.41%
QTD 16.08% 6.41%
YTD 16.08% 6.41%
Inception (annualized since 6/26/00) 7.02% 5.35%

Source: Bloomberg, Miller Value Partners

The majority of semiconductors rose over the week after a number of positive earnings results and guidance with suggestions of headwinds easing in the sector. NXP Semiconductors (NXPI) crossed above the 100-day moving average while Micron Technology Inc. (MU) crossed back above the 50-day after falling below it earlier in the week. Mallinckrodt (MNK) and Teva Pharmaceuticals (TEVA) crossed above the 50-day moving average while Bausch Health Companies (BHC) crossed above the 100-day moving average. UBS published a report on Teva calling the stock “too cheap to ignore” with a price target of $24, upside of 23%.

Exhibit 2: Significant Contributors to Performance, 1/18/19 – 1/25/19

Name Type Return
NXP Semiconductors Equity 5.3%
Micron Technology Inc Equity 7.6%
Mallinckrodt Equity 4.9%
Bausch Health Companies Equity 3.0%
Teva Pharmaceuticals Equity 3.9%

Source: Miller Value Partners

Quotient Technology Inc. (QUOT) declined over the week after announcing preliminary 4Q results citing a shortfall in revenue with revenues of $106.5-107.5m below the $115-120m guidance given in November. The miss is related to a decrease in CPG marketing spend. CenturyLink Inc. (CTL) declined over the week after Guggenheim downgraded the stock to a Sell rating and a price target of $11, -27% downside, citing revenue pressure and questioning the sustainability of the dividend. Qualcomm Inc. (QCOM) declined over the week after Kerrisdale Capital came out with a short report on the stock stating that they expect QCOM to lose the FTC court case. There was minimal news on Intrexon Corp. (XON) and Genworth Financial Inc. (GNW).

Exhibit 3: Significant Detractors from Performance, 1/18/19 – 1/25/19

Name Type Return
Quotient Technology Inc. Equity -10.1%
Intrexon Corp. Equity -10.5%
Genworth Financial Inc. Equity -4.6%
CenturyLink Inc. Equity -5.3%
Qualcomm Inc. Equity -6.8%

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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