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Jun 02, 2023

Opportunity Equity Strategy Update for 5/19/2023 - 5/26/2023

William Keenan

Meta Rises on Continued Efficeincy Gains while Canada GOose Continues Post-Earnings Decline

Last week, the Opportunity Equity Strategy's representative account gained 0.08%, underperforming the S&P 500’s 0.35% rise. (Exhibit 1). The strategy ended the week up 10.70% YTD, 41 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 5/26/231
Time Period Opportunity Equity Representative Account S&P 500
Last Week (5/19 - 5/26) 0.08% 0.35%
MTD 2.35% 1.02%
QTD 0.42% 2.60%
YTD 10.70% 10.29%
1 Year -8.38% 5.45%
5 Year 1.87% 11.02%
10 Year 7.45% 11.93%
Inception (annualized since 6/26/00) 6.12% 6.76%

Source: Bloomberg, Patient Capital Management. Visit the Strategy page for Opportunity Equity performance through the most current month end period.

Meta Platforms, Inc. (META) continued its cost cutting program, with the Washington Post reporting that CEO Mark Zuckerberg outlined his goal of a “scrappier” organization in a companywide meeting held Thursday. The company also announced the sale of graphics interchange format (GIF) platform Giphy to Shutterstock for $53M after the UK Competition and Markets Authority (CMA) blocked its previous $315M acquisition of the company in 2020. Earlier in the week, the Irish Data Protection Commission announced it would fine Meta a record $1.3B for breaching European Union rules on data privacy, outlined in the General Data Protection Regulation. RBC released an in-depth report highlighting that Meta Reels are ramping up in-line with previous expectations and re-iterating the name as a favorite pick in the internet space.

The Wall Street Journal reported Dish Network was in talks to sell wireless plans on its new mobile phone service through, Inc. (AMZN). Mizuho raised its price target to $160 from $145 (32% upside).

SoFi Technologies, Inc. (SOFI) rose after a number of positive reports from Jefferies, JP Morgan, Oppenheimer and others highlighted that concerns around the company using fair value as opposed to accrual accounting appear to be exaggerated.

PureTech Health PLC (PRTC LN) rose through the 50-day moving average.

OneMain Holdings, Inc. (OMF) rose through the 200-day moving average.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 5/19/23 - 5/26/23
Name Type Net Return
Meta Platforms, Inc. Equity 6.7%, Inc. Equity 3.3%
SoFi Technologies, Inc. Equity 9.7%
PureTech Health PLC Equity 8.1%
OneMain Holdings Inc. Equity 2.8%

Source: Patient Capital Management. See below for additional information.

Canada Goose Holdings Inc. (GOOS) continued to decline after reporting mixed 4Q FY 2023 results.

S4 Capital PLC (SFOR LN) fell on limited news.

Mattel, Inc. (MAT) fell through the 100-day moving average.

Alibaba Group Holding Limited (BABA) continued to fall slightly after reporting mixed FY4Q earnings. Amid reports of anticipated layoffs, the company released a statement on social media platform Weibo announcing its intentions to hire 15,000 people in total across its six major business divisions, including 3,000 new university graduates. Susquehanna cut its price target to $160 from $175 (98% upside).

Citi raised its price target on Farfetch Limited (FTCH) to $4.30 from $4.00 (-9% downside), maintaining its sell rating on the stock.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 5/19/23 - 5/26/23
Name Type Net Return
Canada Goose Holdings Inc. Equity -5.6%
S4 Capital PLC Equity -8.2%
Mattel, Inc. Equity -3.5%
Alibaba Group Holding Limited Equity -3.6%
Farfetch Limited Equity -5.4%

Source: Patient Capital Management. See below for additional information.

As of prior week's market close unless otherwise stated.

1The performance figures for the representative Opportunity Equity account reflect the deduction investment management fees and certain other expenses. Returns greater than 1 year are annualized.

Patient Capital Management, LLC completed its acquisition of the Opportunity Equity Strategy from Miller Value Partners, LLC on May 26, 2023. Patient Capital Management served as the investment adviser to the Opportunity Equity Strategy for the majority of the week referenced herein. Additionally, prior versions of this weekly blog posting refer to Miller Value Partners as investment adviser to the Opportunity Equity Strategy.

For additional information about Opportunity Equity Strategy performance, please click on the Opportunity Equity Strategy Composite Performance Disclosure. Past performance is no guarantee of future results.

2Significant Contributors and Detractors are based on holdings that had the greatest effect on representative account performance for the week. Holdings that have been in the portfolio since the end of the most recent calendar quarter are identified by name. The net return shown above for each individual security represents the change in market price of the security during the week, according to a third-party pricing service, or for the partial period held in the portfolio during the week.  Net returns also include any purchases or sales that were made during the week. 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 Patient Capital Management disclaims any responsibility to update such views. There is no guarantee that market trends discussed herein will continue. 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. References to specific securities are for illustrative purposes only. Portfolio composition is shown as of a point in time and is subject to change without notice. Content may not be reprinted, republished or used in any manner without written consent from Patient Capital Management. 

©2023 Patient Capital Management, LLC