February 11, 2019

Opportunity Equity Update for Week Ended 2/8/19

ADT Crosses Above 100-day Moving Average While Teva Crosses Below 50-day Moving Average

Last week, the Opportunity Equity strategy lost -1.88%, underperforming the S&P 500’s 0.11% rise (Exhibit 1). The strategy ended the week up 15.87% YTD, or 763 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 2/8/191

Time Period Opportunity Equity S&P 500
Last Week (2/1 – 2/8) -1.88% 0.11%
MTD -1.91% 0.21%
QTD 15.87% 8.24%
YTD 15.87% 8.24%
Inception (annualized since 6/26/00) 6.99% 5.44%

Source: Bloomberg, Miller Value Partners

ADT Inc. (ADT) crossed above the 100-day moving average. Over the week the company announced the retirement of P. Gray Finney, Senior Vice President and Chief Legal Officer, who will be replaced by David Smail. Ziopharm Oncology (ZIOP) gained over the week. The company registered 37.9m shares, which were sold in a private placement in November. Endo International (ENDP) announced that they would not oppose the added stay of FDA litigation. The FDA filed a motion requesting a further stay through March 15, 2019. Discovery Inc. (DISCA) is working with BBC to come to a deal to combine their natural history and wildlife programming libraries for a new global streaming service. The report in the Financial Times states that the assets are coming from UK TV, their joint-venture.

Exhibit 2: Significant Contributors to Performance, 2/1/19 – 2/8/19

Name Type Return
ADT Inc. Equity 4.7%
Ziopharm Oncology Equity 15.1%
Endo International Equity 1.9%
Discovery Inc. Equity 2.2%
Ziopharm Oncology – Warrants Equity 12.7%

Source: Miller Value Partners

Teva Pharmaceuticals (TEVA) crossed below the 50-day moving average. The company announced the US launch of a generic version of Sabril tablets. Mallinckrodt (MNK) completed the open-label phase of study of Acthar in patients with persistently active RA stating that the results were consistent with prior reports that showed 61% of patients achieved low disease activity at 12 weeks. The company will release full results mid-2019. CenturyLink (CTL) declined over the week after Citi downgraded the stock to a Sell rating and price target of $11, downside 23%, citing risk to the dividend. Genworth Financial Inc. (GNW) crossed below the 50-day moving average after announcing disappointing 4Q18 results. The company reported an operating loss of -$0.58 compared to consensus of $0.26 due to significant charges in the life insurance division. The company is still waiting on approval from Chinese and Canadian regulators and FINRA for their acquisition by China Oceanwide. There was minimal news on Brighthouse Financial Inc. (BHF).

Exhibit 3: Significant Detractors from Performance, 2/1/19 – 2/8/19

Name Type Return
Teva Pharmaceuticals Equity -7.5%
Mallinckrodt Equity -6.9%
Brighthouse Financial Inc. Equity -5.8%
CenturyLink Inc. Equity -6.8%
Genworth Financial Inc. Equity -4.8%

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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