June 24, 2019

Opportunity Equity Update for Week Ended 6/21/19

Genworth Crosses 50-day Moving Average While ADT Falls Below 50-day Moving Average

Last week, the Opportunity Equity strategy gained 2.86%, outperforming the S&P 500’s gain of 2.22% (Exhibit 1). The strategy ended the week up 13.57% YTD, or 530 basis points behind the S&P 500.

Exhibit 1: Preliminary Performance of Opportunity Equity Strategy Versus S&P 500, Through 6/21/191

Time Period Opportunity Equity S&P 500
Last Week (6/14 – 6/21) 2.86% 2.22%
MTD 10.41% 7.34%
QTD -0.15% 4.59%
YTD 13.57% 18.87%
Inception (annualized since 6/26/00) 6.74% 5.85%

Source: Bloomberg, Miller Value Partners

Genworth Financial Inc. (GNW) crossed above the 50-day moving average. Genworth MI Canada Inc. announced on May 23, 2019 that it would redeem $100m principal amount of the company’s 5.68% debentures due June 15, 2020 on June 26, 2019. Last week they announced the redemption price with the company paying approximately $103.4M for the redemption. Bausch Health Companies Inc. (BHC) crossed above the 50 and 200-day moving average. Mizuho published a positive note on the company focusing on the up-coming launch of Duobrii, a topical psoriasis lotion. Ziopharm Oncology Inc. (ZIOP) presented new interim analyses of clinical data from two ongoing sub-studies in its controlled IL-12 platform for the treatment of recurrent or progressive glioblastoma in adults. The company filed a mixed securities shelf with a maximum offering price of $100m. Alexion Pharmaceuticals (ALXN) crossed above the 50, 100, and 200-day moving average. The company announced that the FDA had accepted for priority review their supplemental Biologics License Application for Ultomiris, the company’s long-acting C5 complement inhibitor for the treatment of atypical hemolytic uremic syndrome, with a target action date set for October 19th. NXP Semiconductors (NXPI) crossed above the 50 and 100-day moving average. The company held a conference call discussing the purchase of Marvell’s Wi-Fi assets for ~$1.7B using cash on hand with the deal expected to close 1Q20. The company believes they can double Marvell’s Wi-Fi business by 2022 (from $300m to $600m in revenue) and expects the acquisition to be accretive to NXP’s non-GAAP operating profit in the first full quarter after the transaction closes.

Exhibit 2: Significant Contributors to Performance, 6/14/19 – 6/21/19

Name Type Return
Genworth Financial Inc. Equity 19.5%
Bausch Health Companies Inc. Equity 11.0%
Ziopharm Oncology Inc. Equity 13.2%
Alexion Pharmaceuticals Equity 12.3%
NXP Semiconductors Equity 7.9%

Source: Miller Value Partners

ADT Inc. (ADT) crossed below the 50-day moving average. Homebuilders declined as the Commerce Department reported that housing starts fell to 1,269k in May (-5% YoY) from 1,281k in April but came in ahead of expectations of 1,245k with total permits of 1,294k (-0.5% YoY) beating consensus of 1,292k. Single family starts declined to 820k (-12.5% YoY) from 876k in April. Lennar Corp. (LEN) crossed below the 50-day moving average while Raymond James downgraded the stock to Market Perform with a price target of $55, 7% upside. There was limited company specific news on Quotient Technology Inc. (QUOT) and Pulte Group Inc. (PHM).

Exhibit 3: Significant Detractors from Performance, 6/14/19 – 6/21/19

Name Type Return
ADT Inc. Equity -17.2%
Quotient Technology Inc. Equity -11.0%
Lennar Corp. Equity -7.4%
*New Security* Equity -4.4%
Pulte Group Inc. Equity -3.9%

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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