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Jun 27, 2023

Opportunity Equity Weekly Update for 6/16/2023 – 6/23/2023

William Keenan

Coinbase Rises on Supreme Court Ruling while Alibaba Falls on Management Shakeup

Last week, the Opportunity Equity Strategy's representative account declined -2.81%, underperforming the S&P 500’s -1.37% fall. (Exhibit 1). The strategy ended the week up 19.69% YTD, 550 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 6/23/231
Time Period Opportunity Equity Representative Account S&P 500
Last Week (6/16 - 6/23) -2.81% -1.37%
MTD 8.20% 4.14%
QTD 8.57% 6.23%
YTD 19.69% 14.19%
1 Year 15.37% 16.55%
5 Year 1.81% 11.49%
10 Year 8.85% 12.70%
Inception (annualized since 6/26/00) 6.46% 6.90%

Source: Bloomberg, Patient Capital Management.

Coinbase Global, Inc. (COIN) rose through the 50 and 200-day moving averages on Thursday as CEO Brian Armstrong at the company’s State of Crypto Summit reiterated his intentions for Coinbase to become a digital “super-app” over the next 5-7 years in the wake of Fidelity and Blackrock’s recent filings for Bitcoin ETF prospectuses. On Friday, the United States Supreme Court ruled in favor of Coinbase 5-4 allowing it to put customer lawsuits on pause while it pursues appeals to move the disputes out of courts and into private arbitration.

The United States Federal Trade Commission (FTC) sued, Inc. (AMZN) in U.S. District Court alleging the company "knowingly duped millions of consumers into unknowingly enrolling in its Amazon Prime service" for years. Fitch affirmed its AA- rating for the company, maintaining its stable outlook. Jefferies raised its price target to $150 from $135 (16% upside).

Bloomberg News reported that the Malaysian government is taking legal action against Meta Platforms, Inc. (META) after the company failed to remove “harmful” and “undesirable” content on the platform despite the government’s requests. UBS highlighted its confidence in AI chatbots boosting advertising revenue growth, raising its price target to $335 from $300 (11% upside), while Roth MKM raised its price target to $315 from $255 (9% upside).

Norwegian Cruise Line Holdings Ltd. (NCLH) rose on limited news.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 6/16/23 - 6/23/23
Name Type Net Return
Coinbase Global, Inc. Equity 10.6%, Inc. Equity 3.1%
Meta Platforms, Inc. Equity 2.8%
Norwegian Cruise Line Holdings Ltd. Equity 1.4%
Coinbase Global. Inc. 3.375% Notes Fixed income 1.5%

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

Alibaba Group Holding Limited (BABA) fell through the 50, 100, and 200-day moving averages after announcing Chairman & CEO Daniel Zhang would be replaced by Co-Founder Joseph Tsai as Chairman and Eddie Wu as CEO. Mr. Zhang will continue to lead Alibaba Cloud Intelligence Group as its Chairman and CEO. Loop Capital raised its price target to $135 from $130 (59% upside).

Ovintiv Inc. (OVV) fell through the 50-day moving average, following commodity prices lower throughout the week.

Peloton Interactive, Inc. (PTON) fell through the 50-day moving average. Wolfe Research downgraded the name to underperform from peer perform with a $6 price target (-18% upside).

Travel + Leisure Co. (TNL) fell through the 50, 100, and 200-day moving averages.

Canada Goose Holdings Inc. (GOOS) fell on limited news.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 6/16/23 - 6/23/23
Name Type Net Return
Alibaba Group Holding Limited Equity -7.8%
Ovintiv Inc. Equity -7.7%
Peloton Interactive, Inc. Equity -15.4%
Travel + Leisure Co. Equity -6.8%
Canada Goose Holdings Equity -7.4%

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