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Miller Value Partners Likes These Two Stocks; Bearish on One

Faizan Farooque

Miller Value Partners recently released its 2019 Q3 investor letter – you can download a copy here.

The investment management firm did not have a good third quarter, experiencing a 1.81% decline in returns, while the S&P 500 rose 1.70%.

OneMain Holdings Inc (NYSE:OMF) and Genworth Financial Inc. (NYSE:GNW) were among the top contributors for the investment management firm.

Miller Value had the following to say on OMF in their letter:

"OneMain Holdings Inc. (OMF) gained 15.2% as they reported 2Q results which beat expectations. The company reported adjusted EPS of $1.62 versus $1.34 expected with 2Q net charge-offs (NYSE:NCO) of 6.2%. The company declared a special dividend of $2/share. The company increased its outlook with net receivables at year-end 2019 expected to grow by 8-10% compared to 5-10% previously and with the NCO rate expected to come in at 6.1-6.3% compared to <6.5% previously. The company continues to benefit from lower rates as the company has been able to refinance and issue new debt at very favorable costs, while also extending the duration of its funding."

The fund also had a lot to say on GNW in the letter:

"Genworth Financial Inc. (NYSE:GNW) rose 18.6% as the company announced an agreement to sell its 57% controlling stake of its Canadian unit to Brookfield Business Partners LP for C$2.4B. The company hopes this will help push forward their merger with Oceanwide after agreeing to another extension of the deadline to November 2019."

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 35% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in GNW at the end of June. Pentwater and Maso Capital are also very bullish on GNW based on the most recent 13F filings.

Apart from the biggest contributors, the investment management firm also offered commentary on some of the negative contributors in the quarter - Quotient Technology Inc (NYSE: QUOT) and Alexion Pharmaceuticals, Inc. (NASDAQ: ALXN).

Bill Miller
Bill Miller

Miller Value Partners had the following to say on QUOT regarding the stock:

"Quotient Technology (NYSE:QUOT) lost 27.2% during the quarter after reporting mixed 2Q results and lowering guidance. Revenue came in at $104.7M above consensus of $103.8M and Earnings Before Income, Taxes, Depreciation, and Amortization (EBITDA) of $11.7M was below the Street at $12.7M. The company lowered full-year guidance to revenue of $422-432M from $460-470M and adjusted EBITDA of $42-48M below $66-71M. The decrease is the result of lower spending from three large consumer packaged goods (CPG) customers and delays with new products. The company announced the completion of its stock buyback program with $60M in buybacks. Steven Boal is returning as CEO and board member Scott Raskin was named President."

At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4 from the second quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in QUOT a year ago.

Meanwhile, the investor offered commentary on ALXN in the following words:

"Alexion Pharmaceuticals (NASDAQ:ALXN) fell 25.2% over the quarter after reporting a top-line beat with revenue of $1,203M versus the Street at $1,174M and EPS of $2.64 ahead of consensus of $2.34. The company raised full-year guidance with revenue of $4,750-4,800M from $4,675-4,750m and EPS of $9.65-9.85 from $9.25. Later in the quarter, the US Patent and Trademark Office said it would review three patents on its top-selling Soliris drug following a challenge filed by Amgen. The European Patent Office decided to refrain from granting Alexion two Soliris patents which would have provided patent protection through 2027. The company also announced the acquisition of an exclusive license to develop and commercialize BBIO’s/EIDX’s TTR stabilizer AG10 in Japan for $25M upfront, $25M equity investment along with milestones and royalties. Alexion announced the planned succession of CFO Paul Clancy with Dr. Aradhana Sarin M.D., who is currently Chief Strategy Officer, beginning in the fourth quarter."

At the end of the third quarter, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 1 from the previous quarter. By comparison, 43 hedge funds held shares or bullish call options in ALXN a year ago. Alexion wasn't among the 30 most popular hedge fund stocks and it wasn't one of the top 5 healthcare stocks among hedge funds.

Disclosure: None. This article originally published at Insider Monkey.