June 29, 2020

Opportunity Equity Update for Week Ended 6/26/20

Farfetch Gains on Updated Guidance While Facebook Falls as Boycott Increases

Last week, the Opportunity Equity strategy lost -2.68%, outperforming the S&P 500’s -2.86% decline (Exhibit 1). The strategy ended the week down -12.36% YTD, or 641 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/26/201

Time Period Opportunity Equity S&P 500
Last Week (6/19 – 6/26) -2.68% -2.96%
MTD 7.48% -1.03%
QTD 43.55% 16.97%
YTD -12.36% -5.95%
Inception (annualized since 6/26/00) 6.58% 5.75%

Source: Bloomberg, Miller Value Partners

Farfetch Ltd (FTCH) gained over the week after releasing new guidance that was above expectations. The company guided for GMV in 2Q of $605-630M vs. consensus at $488M, representing 25-30% YoY growth with adjusted EBITDA improving YoY (2Q19 EBITDA was -$38M) vs consensus estimating -$46M. The company reiterated that they plan to be EBITDA profitable for the full year 2021. BTIG upgraded Farfetch to buy with a price target of $20.50, upside of 17%. Medifast Inc. (MED) continued higher over the week after B Riley upgraded the stock to Buy with a price target of $164, upside of 26%. Stifel raised their price target on Peloton Interactive Inc. (PTON) to $62 up from $55 previously, upside of 7%, while Raymond James resumed coverage of the name with an outperform rating and a price target of $65, upside of 11%. Ziopharm Oncology Inc. (ZIOP) reported that patient enrollment of controlled IL-12 Libtayo combo in rGBM Phase II trial was completed with more updated anticipated in late 2020 and 2021. Jefferies reinstated coverage of Ziopharm with a buy rating and a price target of $7, upside of 105%.

Exhibit 2: Significant Contributors to Performance, 6/19/20 – 6/26/20

Name Type Return
Farfetch Ltd Equity 14.1%
Medifast Inc. Equity 10.8%
Peloton Interactive Inc. Equity 14.8%
*Recently Added Security* Equity 13.7%
Ziopharm Oncology Inc. Equity 4.3%

Source: Miller Value Partners

Facebook Inc. (FB) crossed below the 50-day moving average as advertisers continued to join in the boycotting of ads on the platform in response to Facebook’s content policies. Energy Transfer LP (ET) crossed below the 50-day moving average after Citi lowered their price target on the name to $10 from $18 previously, upside of 42%. UBS raised their price target on OneMain Holdings Inc. (OMF) to $42 from $36, upside of 77%. United Airlines Holdings Inc. (UAL) announced the pricing and upsize of its previously announced private offering of its MileagePlus senior secured notes at a 7% yield along with a term loan facility for a total aggregate amount of $6.8B. There was minimal news on ADT Inc. (ADT).

Exhibit 3: Significant Detractors from Performance, 6/19/20 – 6/26/20

Name Type Return
Facebook Inc. Equity -9.5%
Energy Transfer LP Equity -11.4%
OneMain Holding Inc. Equity -8.7%
ADT Inc. Equity -4.6%
United Airlines Holdings Inc. Equity -10.7%

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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