April 23, 2018

Opportunity Equity Update for Week Ended 4/20/18

Amazon Climbs with Release of Annual Letter While Intrexon Declines on Limited News

Last week, the Opportunity Equity strategy gained 0.55%, outperforming the S&P 500’s 0.54% rise (Exhibit 1). The strategy ended the week down -1.74% YTD, or 218 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 4/20/181

Time Period Opportunity Equity S&P 500
Last Week (4/13 -4/20) 0.55% 0.54%
MTD 0.75% 1.21%
QTD 0.75% 1.21%
YTD -1.74% 0.44%
Inception (annualized since 6/26/00) 6.93% 5.51%

Source: Bloomberg, Miller Value Partners

Amazon.com Inc. (AMZN) crossed above the 50-day moving average after releasing its annual shareholder letter which disclosed for the first time the number of Prime Members globally which has exceeded 100 million paid subscribers. United Continental Holdings (UAL) crossed above the 50 and 100-day moving average after announcing first quarter results. United reported adjusted EPS of $0.50 which beat consensus of $0.44. Total revenue increased over 9% YoY driven by solid revenue per available seat mile (RASM) growth of 2.7%. Domestic passenger yields increased 1.6% YoY despite a 5.2% increase in domestic available seat miles. The company guided for 2Q revenue per available seat mile of up 1-3% YoY and raised the midpoint of its full year EPS range from $7.50 to $7.75. The company has repurchased $747M in stock year to date with $2.3B still available on their repurchase authorization. Delta Air Lines Inc. (DAL) crossed above the 50 and 100 day moving average. Platform Specialty Products Inc. (PAH) crossed above the 50-day moving average. There was minimal news on RH (RH).

Exhibit 2: Significant Contributors to Performance, 4/13/18 – 4/20/18

Name Type Return
 Amazon.com Inc. Equity 6.8%
 United Continental Holdings Equity 7.8%
 Delta Air Lines Inc. Equity 4.7%
 RH Equity 3.5%
 Platform Specialty Products Corp. Equity 5.1%

Source: Miller Value Partners

Intrexon Corp. (XON) was down over the week. Exemplar Genetics, a wholly owned subsidiary of Intrexon Corp., announced the FDA had exercised enforcement discretion in regards to the ExeGen®ATM MiniSwine model clearing it for commercial use as a research model. Foot Locker Inc. (FL) fell below the 200-day moving average. The Buckingham Research Group reinstated coverage of Foot Locker with a buy rating and a price target of $54, 32% upside. Stitch Fix Inc. (SFIX) fell below the 50 and 100-day moving average. The company was initiated at Buckingham with a neutral rating and a price target of $22. Both Lennar Corp. (LEN) and Pulte Group Inc. (PHM) were down for the week as the US 10-year’s yield continued to climb, to 2.96%. Lennar fell below the 50 and 200-day moving average while Pulte fell below the 200-day moving average.

Exhibit 3: Significant Detractors from Performance, 4/13/18 – 4/20/18

Name Type Return
 Intrexon Corp. Equity -8.6%
 Foot Locker Inc. Equity -8.8%
 Stitch Fix Inc. Equity -12.8%
 Lennar Corp. Equity -4.1%
 Pulte Group Inc. Equity -2.6%

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.

©2018 Miller Value Partners, LLC

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