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Jan 08, 2024

Opportunity Equity Weekly Update for 12/29/2023 – 1/5/2024

William Keenan

Citi Rises on Wells Fargo Upgrade while SoFi Declines on KBW Downgrade

Last week, the Opportunity Equity Strategy's representative account declined -2.03%, underperforming the S&P 500’s -1.50% fall. (Exhibit 1). The strategy ended the week down -2.03% YTD, 53 basis points behind the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 1/5/241

Time Period Opportunity Equity Representative Account S&P 500
Last Week (12/29 - 1/5) -2.03% -1.50%
MTD -2.03% -1.50%
QTD -2.03% -1.50%
YTD -2.03% -1.50%
1 Year 32.89% 25.39%
5 Year 8.26% 15.10%
10 Year 7.29% 11.96%
Inception (annualized since 6/26/00) 6.91% 7.13%
Source: Bloomberg, Patient Capital Management.

Citigroup Inc. (C) rose after Wells Fargo named Citi its #1 Large-Cap Bank pick, increasing its 1-year price target to $70 from $60 (29% upside). Wells Fargo also highlighted its expectation for the stock to double within the next three years. Barclays raised its price target to $63 from $59 (16% upside).

Peloton Interactive, Inc. (PTON) rose after the company announced a partnership with TikTok to promote Peloton’s fitness content on the short-form mobile video platform.

PureTech Health PLC (PRTC LN) crossed the 200-day moving average as Jefferies reiterated its 420pp price target (103% upside) on the shares, and extended its cash runway forecast through 2027, in-line with management guidance.

CVS Health Corporation (CVS) announced that interim CFO Tom Cowhey had been named permanent CFO, replacing previous CFO Shawn Guertin who had been on a leave of absence since October 2023. The company also re-affirmed FY 2024 adjusted EPS guidance of at least $8.50, and Cash flow from operations of at least $12.5B. During the fourth quarter, CVS entered into a $3B fixed dollar accelerated share repurchase transaction (2.9% of shares outstanding), which became effective on January 3rd, 2024.

Green Thumb Industries Inc. (GTBIF) rose on limited news.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 12/29/23 - 1/5/24

Name Type Net Return
Citigroup Inc. Equity 5.6%
Peloton Interactive, Inc. Equity 10.3%
PureTech Health PLC Equity 6.6%
Green Thumb Industries Inc. Equity 5.4%
CVS Health Corporation Equity

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

SoFi Technologies, Inc. (SOFI) fell after KBW downgraded the stock to underperform from market perform, lowering its price target to $6.50 from $7.50 (-21% downside).

Wells Fargo downgraded Norwegian Cruise Line Holdings Ltd. (NCLH) from overweight to equal weight, maintaining its $18 price target (1% upside).

B Riley raised its price target on Expedia Group, Inc. (EXPE) to $200 from $160 (34% upside).

DA Davidson raised its price target on, Inc. (AMZN) to $195 from $157 (34% upside).

TD Cowen raised its price target on Coinbase Global, Inc. (COIN) to $75 from $39 (-51% downside).

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 12/29/23 - 1/5/24

Name Type Net Return
SoFi Technologies, Inc. Equity -17.4%
Norwegian Cruise Line Holdings Ltd.  Equity -11.1%
Expedia Group, Inc.  Equity -3.6%, Inc. Equity  -4.4%
Coinbase Global, Inc.  Equity -11.5%
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