October 1, 2018

Opportunity Equity Update for Week Ended 9/28/18

Intrexon Gains on Medical Marijuana Advancement While Teva Falls as Morgan Stanley Lowers Estimates

Last week, the Opportunity Equity strategy lost -1.12%, underperforming the S&P 500’s -0.51% loss (Exhibit 1). The strategy ended the week up 23.23% YTD, or 1267 basis points ahead of the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 9/28/181

Time Period Opportunity Equity S&P 500
Last Week (9/21 – 9/28) -1.12% -0.51%
MTD -2.32% 0.57%
QTD 10.83% 7.71%
YTD 23.23% 10.56%
Inception (annualized since 6/26/00) 8.09% 5.93%

Source: Bloomberg, Miller Value Partners

Intrexon Corp. (XON) crossed above the 50, 100 and 200-day moving average after announcing it has achieved advances in the development of its microbial platform to produce cannabinoids for medical uses. Alexion Pharmaceuticals (ALXN) crossed above the 50 and 100-day moving average after announcing positive topline results from the Phase 3 PREVENT study of Soliris in patients with (AQP4) auto antibody-positive neuromyelitis optica spectrum disorder (NMOSD). This was followed by the announcement that Alexion will acquire Syntimmune for $400M upfront with additional milestone payments up to $800M. Amazon.com Inc. (AMZN) was up over the week as Stifel raised its price target to $2,525 up from $2,020, upside of 64%. Endo International PLC (ENDP) agreed to an additional stay of its litigation against the FDA until December 31st. Bausch Health Companies (BHC) announcing that it will redeem $125M aggregate principal amount of its outstanding 7.5% senior notes due 2021 using cash on hand.

Exhibit 2: Significant Contributors to Performance, 9/21/18 – 9/28/18

Name Type Return
Intrexon Corp Equity 18.8%
Alexion Pharmaceuticals Equity 14.0%
Amazon.com Inc. Equity 4.6%
Endo International PLC Equity 4.4%
Bausch Health Companies Equity 3.0%

Source: Miller Value Partners

Teva Pharmaceuticals (TEVA) fell below the 50 and 100-day moving average after Morgan Stanley published a report lowering EPS estimates but maintaining a price target of $20, 7% downside.CenturyLink Inc. (CTL) was down over the week after CTL announced the departure of CFO, Sunit Patel for T-mobile effective September 28th. OneMain Holdings Inc. (OMF) fell below the 50 and 100-day moving average. Moody’s Investors Service affirmed OneMain’s corporate family rating and revised the outlook on the rating to positive from stable. RH (RH) crossed below the 100-day moving average on limited news. There was minimal news on NXP Semiconductors (NXPI).

Exhibit 3: Significant Detractors from Performance, 9/21/18 – 9/28/18

Name Type Return
Teva Pharmaceuticals Equity -12.0%
CenturyLink Inc. Equity -8.0%
OneMain Holdings Inc. Equity -5.9%
NXP Semiconductors Equity -8.5%
RH Equity -4.0%

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.

©2018 Miller Value Partners, LLC

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