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Jul 10, 2023

Opportunity Equity Strategy Update for 6/30/2023 - 7/7/2023

William Keenan

Alibaba Rises on Ant Fine while SoFi Falls Despite Supreme Court Decision

Last week, the Opportunity Equity Strategy's representative account gained 0.56%, outperforming the S&P 500’s -1.11% fall. (Exhibit 1). The strategy ended the week up 26.10% YTD, 1,051 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 7/7/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (6/30 - 7/7) 0.56% -1.11%
MTD 0.56% -1.11%
QTD 0.56% -1.11%
YTD 26.10% 15.59%
1 Year 16.94% 14.67%
5 Year 2.95% 11.71%
10 Year 8.89% 12.55%
Inception (annualized since 6/26/00) 6.69% 6.95%
Source: Bloomberg, Patient Capital Management.

Alibaba Group Holding Limited. (BABA) rose above the 50, 100, and 200-day moving averages after the People’s Bank of China (PBOC) fined its Ant Group subsidiary $984M for legal and regulatory violations, signaling the end of China’s multiyear regulatory overhaul and paving the way for an Ant Group IPO. CCB International raised its price target to $145 from $141.40 (60% upside).

Coinbase Global, Inc. (COIN) continued to rise after CBOE Global Markets refiled ETF applications on behalf of Fidelity and other asset managers. The United States Securities Exchange Commission (SEC) informed the exchange that the initial filings were not sufficiently clear and comprehensive during the previous week. Piper Sandler lowered its price target to $60 from $65 (-24% downside) citing “too much uncertainty” due to a “lack of regulatory clarity in the U.S.”

Mattel Inc. (MAT) continued to rise on strong anticipation of its upcoming Barbie feature-length film, set for theatrical release in the United States on July 21st. The Guardian reported that Mattel “is trying to reinvent a further 45 of its to products as screen ideas” in the future.

Green Thumb Industries Inc. (GTBIF) rose above the 100-day moving average. In-line with the recreational cannabis legalization signed by Governor Wes Moore in May 2023, Green Thumb commenced adult-use sales at its four Maryland dispensaries on July 1st.

Expedia Group, Inc. (EXPE) rose on limited news.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 6/30/23 - 7/7/23

Name Type Net Return
Alibaba Group Holding Limited Equity 8.6%
Coinbase Global, Inc. Equity 10.0%
Mattel, Inc. Equity 4.8%
Green Thumb Industries Inc. Equity 9.6%
Expedia Group, Inc. Equity 2.3%
Source: Patient Capital Management. See below for additional information.

SoFi Technologies, Inc. (SOFI) fell slightly despite the Supreme Court of the United States blocking the Biden Adminstration’s attempt to forgive ~$430B of student loans. Oppenheimer highlighted their belief that much of this good news is already reflected in the share price, therefore maintaining their market perform rating.

Farfetch Limited (FTCH) fell below the 200-day moving average.

S4 Capital PLC (SFOR LN), Canada Goose Holdings Inc. (GOOS), and Taylor Morrison Home Corporation (TMHC) fell on limited news.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 6/30/23 - 7/7/23

Name Type Net Return
Farfetch Limited Equity -5.5%
S4 Capital PLC Equity -6.0%
Canada Goose Holdings Inc. Equity -3.1%
SoFi Technologies, Inc. Equity -3.5%
Taylor Morrison Home Corporation Equity -4.2%
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