June 22, 2020

Opportunity Equity Update for Week Ended 6/19/20

Bausch Gains on Raised Price Target While United Falls on New Financing

Last week, the Opportunity Equity strategy gained 3.47%, outperforming the S&P 500’s 1.88% rise (Exhibit 1). The strategy ended the week down -9.94% YTD, or 675 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/19/201

Time Period Opportunity Equity S&P 500
Last Week (6/12 – 6/19) 3.47% 1.88%
MTD 10.44% 1.88%
QTD 47.50% 20.41%
YTD -9.94% -3.19%
Inception (annualized since 6/26/00) 6.73% 5.91%

Source: Bloomberg, Miller Value Partners

Bausch Health Companies Inc. (BHC) crossed above the 50 and 100-day moving average. H C Wainwright raised its price target on the name to $64 from $50, upside of 226%. Bausch received approval to sell their B+L ULTRA monthly silicone hydrogel contact lenses in China. Precigen Inc. (PGEN) crossed above the 200-day moving average. Medifast Inc. (MED) maintained its quarterly cash dividend at $1.13, yield of 3.76%. Flexion Therapeutics (FLXN) crossed above the 100-day moving average. There was minimal news on Teva Pharmaceuticals (TEVA).

Exhibit 2: Significant Contributors to Performance, 6/12/20 – 6/19/20

Name Type Return
Teva Pharmaceuticals Equity 12.6%
Bausch Health Companies Inc. Equity 14.4%
Precigen Inc. Equity 20.5%
Medifast Inc. Equity 10.1%
Flexion Therapeutics Equity 12.9%

Source: Miller Value Partners

United Airlines Holdings Inc. (UAL) announced two new financing initiatives during the week with a $5B term loan facility backed by their loyalty program along with a 28M share at-the-market (ATM) offering which allows it to sell up to 28m common shares over the next two years. The company noted that they expect cash burn to be ~$40m/day in 2Q dropping down to ~$30m/day in 3Q and they expect to end 3Q with $17B in total liquidity. DXC Technology Company (DXC) crossed below the 50-day moving average. Delta Air Lines Inc. (DAL) held its annual shareholders’ meeting where it noted that it expects to finish this quarter with over $15B in liquidity with a daily cash burn of $30M getting to breakeven by spring 2021. Citi raised their price target to $38 from $30, upside of 29%. OneMain Holdings Inc. (OMF) released May trust data which shows delinquency rates falling with +30Day delinquencies falling 3% on a YoY basis to the lowest level since April 2019 with net-charge-offs (NCOs) continuing to move higher on a YoY basis. There was minimal news on Genworth Financial Inc. (GNW).

Exhibit 3: Significant Detractors from Performance, 6/12/20 – 6/19/20

Name Type Return
Genworth Financial Inc. Equity -15.0%
United Airlines Holdings Inc. Equity -7.1%
DXC Technology Company Equity -5.3%
Delta Air Lines Inc. Equity -3.0%
OneMain Holding Inc. Equity -2.1%

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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