May 21, 2018

Opportunity Equity Update for Week Ended 5/18/18

Valeant Continues to Climb on Upgrade While JPMorgan Chase & Co. Warrants Fall Below 50 and 100-day moving average

Last week, the Opportunity Equity strategy gained 0.71%, outperforming the S&P 500’s -0.47% decline (Exhibit 1). The strategy ended the week up 4.75% YTD, or 251 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 5/18/181

Time Period Opportunity Equity S&P 500
Last Week (5/11 -5/18) 0.71% -0.47%
MTD 6.18% 2.63%
QTD 7.40% 3.02%
YTD 4.75% 2.24%
Inception (annualized since 6/26/00) 7.28% 5.59%

Source: Bloomberg, Miller Value Partners

Valeant Pharmaceuticals International Inc. (VRX) continued to rise over the week as Mizuho upgraded the stock to Buy with a price target of $27, upside of 22%. Genworth Financial Inc. (GNW) crossed above the 200-day moving average. Teva Pharmaceuticals (TEVA) rose over the week after Perrigo announced the delay of their generic version of Teva’s ProAir until 2019. OneMain Holdings Inc. (OMF) rose over the week as Citi upgraded the stock to buy with a price target of $40, 16% upside. There was minimal news on Flexion Therapeutics (FLXN).

Exhibit 2: Significant Contributors to Performance, 5/11/18 – 5/18/18

Name Type Return
 Valeant Pharmaceuticals International Inc. Equity 6.2%
 Flexion Therapeutics Equity 7.7%
 Genworth Financial Inc. Equity 8.8%
 Teva Pharmaceuticals Equity 9.9%
 OneMain Holdings Inc. Equity 3.6%

Source: Miller Value Partners

JPMorgan Chase & Co. Warrants (JPM/WS) fell below the 50 and 100-day moving average. Pulte Group Inc. (PHM) fell below the 100-day moving average. Celgene Corp. (CELG) declined over the week after HHS Secretary Azar called out Revlimid indirectly in a drug pricing speech.  Discovery Inc. (DISCA) fell below the 50 and 100-day moving average. There was minimal news on Lennar Corp. (LEN).

 Exhibit 3: Significant Detractors from Performance, 5/11/18 – 5/18/18

Name Type Return
 JPMorgan Chase & Co. – Warrants Derivative -4.0%
 Pulte Group Inc. Equity -4.5%
 Celgene Corp. Equity -7.3%
 Discovery Inc. Equity -6.1%
 Lennar Corp. Equity -4.2%

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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