Coinbase Rises on District Court Ruling while Delta Falls Despite Strong 2Q Earnings
Last week, the Opportunity Equity Strategy's representative account gained 4.26%, outperforming the S&P 500’s 2.44% rise. (Exhibit 1). The strategy ended the week up 31.47% YTD, 1,306 basis points ahead of the S&P 500.
Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 7/14/231
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (7/7 - 7/14) | 4.26% | 2.44% |
| MTD | 4.85% | 1.30% |
| QTD | 4.85% | 1.30% |
| YTD | 31.47% | 18.41% |
| 1 Year | 30.28% | 20.91% |
| 5 Year | 3.42% | 11.90% |
| 10 Year | 9.02% | 12.49% |
| Inception (annualized since 6/26/00) | 6.88% | 7.05% |
Source: Bloomberg, Patient Capital Management.
Coinbase Global, Inc. (COIN) rose after Judge Analisa Torres ruled in United States District Court that the XRP token sold by Ripple Labs Inc. is not a security when sold to the broader public. The ruling was considered a significant victory for the cryptocurrency industry. Needham raised its price target to $120 from $70 (14% upside), while Wedbush raised its price target to $110 from $75 (4% upside).
Expedia Group, Inc. (EXPE) rose after launching OneKey, its consolidated cross-platfrom rewards program. Expedia also terminated its relationship with rival travel website Hopper, after the company “determined that Hopper’s features exploit consumer anxiety and confuse customers, leading them to purchase services they neither need nor fully understand.” Barclays raised its price target to $137 from $113 (16% upside).
S4 Capital PLC (SFOR LN) rose through the 50-day moving average. Jefferies assumed coverage on the name with a 210.00pp price target (58% upside), while Fitch affirmed its BB rating on the company and stable outlook.
OneMain Holdings, Inc. (OMF) rose after the company reported June trust data that showed net charge-offs (NCOs) down -1bp M/M to 4.25%. Early-stage delinquencies (DQs) of 1.05% rose 3bps sequentially, while late-stage delinquencies of 1.31% rose 2bps sequentially. Jefferies highlighted that NCO and DQ levels remain below 2019 levels, while Wells Fargo raised its price target to $47 from $41 (2% upside).
SoFi Technologies, Inc. (SOFI) rose despite Wedbush reiterating its underperform rating due to a “backdoor” student loan moratorium extension persisting through the 2024 United States Presidential Election. Morgan Stanley also downgraded the stock to underweight, though raising its price target to $7 from $6.50 (-23% downside), citing that the company looks “increasingly like a bank” and should be valued accordingly.
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 7/7/23 - 7/14/23
| Name | Type | Net Return |
| Coinbase Global, Inc. | Equity | 33.7% |
| Expedia Group, Inc. | Equity | 6.0% |
| S4 Capital PLC | Equity | 15.8% |
| OneMain Holdings, Inc. | Equity | 5.3% |
| SoFi Technologies, Inc. | Equity | 12.8% |
Source: Patient Capital Management. See below for additional information.
Norwegian Cruise Line Holdings Ltd. (NCLH) fell on limited news.
Delta Air Lines Inc (DAL) fell despite reporting strong 2Q earnings. Adjusted EPS came in at $2.68 vs. consensus estimates of $2.41, while revenues came in ahead of expectations at $14.6B vs. the $14.4B expected. The company guided for 3Q23 Revenue to be up 11%-14% y/y, with operating margins in the mid-teens, and EPS of $2.20 to $2.50. For full year 2023, Delta raised its EPS outlook to $6.50 at the midpoint from $5.50, and operating margins to at least 12% from 11% at the midpoint. Evercore ISI raised its price target to $60 from $55 (29% upside), while Susquehanna raised its price target to $60 from $54 (29% upside).
Goldman Sachs raised its price target on United Airlines Holdings, Inc. (UAL) to $61 from $54 (14% upside), while Jefferies raised its price target to $60 from $50 (12% upside).
Green Thumb Industries Inc. (GTBIF) fell through the 50 and 100-day moving averages.
Wells Fargo raised its price target on Chesapeake Energy Corporation (CHK) to $85 from $83 (5% upside), while Benchmark lowered its price target to $93 from $107 (15% upside).
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 7/7/23 - 7/14/23
| Name | Type | Net Return |
| Norwegian Cruise Line Holdings Ltd. | Equity | -6.6% |
| United Airlines Holdings, Inc. | Equity | -3.7% |
| Delta Air Lines, Inc. | Equity | -2.7% |
| Green Thumb Industries Inc. | Equity | -8.3% |
| Chesapeake Energy Corporation | Equity | -1.3% |
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
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