United and Western Alliance Rise on Earnings while Farfetch Declines on Limited News
Last week, the Opportunity Equity Strategy's representative account gained 0.70%, in-line with the S&P 500’s 0.70% rise. (Exhibit 1). The strategy ended the week up 32.39% YTD, 1,315 basis points ahead of the S&P 500.
Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 7/21/231
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (7/14 - 7/21) | 0.70% | 0.70% |
| MTD | 5.58% | 2.00% |
| QTD | 5.58% | 2.00% |
| YTD | 32.39% | 19.24% |
| 1 Year | 17.11% | 15.39% |
| 5 Year | 3.41% | 12.05% |
| 10 Year | 8.92% | 12.49% |
| Inception (annualized since 6/26/00) | 6.90% | 7.08% |
Source: Bloomberg, Patient Capital Management.
Ovintiv Inc. (OVV) followed oil prices higher throughout the week. Morgan Stanley resumed coverage with an equal-weight rating and $44 price target (4% upside).
Western Alliance Bancorp (WAL) rose through the 100-day moving average after earnings beat consensus estimates. Revenue came in at $669M vs. $654M expected, while EPS was in-line at $1.96. The company missed on net interest income (NII) coming in at $550M vs $577M expected while non-interest income beat at $119M vs $91M expected. The bank’s CET1 ratio rose 70bps to 10.10%, in-line with expectations. For 2H 2023, Western Alliance guided for net interest margin of 3.55% at the midpoint, in-line with expectations. Management also guided for an efficiency ratio in the high 40% range, well below consensus of 54%, and net charge-offs of 5-15 bps, below consensus of 13 bps. JP Morgan raised its price target to $60 from $53 (24% upside), while Truist raised its price target to $60 from $50 (24% upside).
United Airlines Holdings, Inc. (UAL) rose after reporting strong 2Q earnings. Adjusted EPS came in at $5.03 vs. consensus estimates of $3.99, while revenues came in ahead of expectations at $14.2B vs. the $13.9B expected. The company guided for 3Q23 Revenue to be up 10%-13% y/y, with EPS of $3.85 to $4.35. For full year 2023, United raised its EPS outlook to $11.50 at the midpoint from $11, while re-affirming its CapEx target of $8.5B and net leverage ratio of below 3x. Earlier in the week, United announced it had reached an agreement in principal with its pilots union, where pilots are expected to receive a 40% raise over the life of the agreement. JP Morgan raised its price target to $93 from $70 (61% upside), while Cowen raised its price target to $70 from $65 (22% upside).
Delta Air Lines, Inc. (DAL) continued to rise after reporting strong Q2 results during the previous week. Evercore ISI raised its price target to $60 from $55 (24% upside), while Bank of America raised its price target to $53 from $50 (9% upside).
Domino’s Pizza signed a deal with Uber Technologies Inc (UBER) to list its menus on the ride-share company's Eats and Postmates food-delivery apps, while filings revealed that Uber CEO Dara Khosrowshahi had sold $4.75M worth of shares. Jefferies raised its price target to $55 from $50 (13% upside), while Roth MKM raised its price target to $59 from $46 (22% upside).
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 7/14/23 - 7/21/23
| Name | Type | Net Return |
| Ovintiv Inc. | Equity | 10.3% |
| United Airlines Holdings, Inc. | Equity | 8.0% |
| Western Alliance Bancorp | Equity | 24.3% |
| Delta Air Lines, Inc. | Equity | 4.4% |
| Uber Technologies Inc | Equity | 5.5% |
Source: Patient Capital Management. See below for additional information.
Farfetch Limited (FTCH) fell below the 200-day moving average.
Amazon.com, Inc. (AMZN) announced it would invest $120M in a new satellite processing facility in Florida as a part of its emerging consumer internet business, project Kuiper.
Alphabet Inc. (GOOGL) fell below the 50-day moving average. The Wall Street Journal reported that co-founder Sergey Brin is now visiting the company’s headquarters three to four days per week, working closely with company researchers on Gemini, Google’s next artificial-intelligence system. Stifel raised its price target to $135 from $130 (12% upside), while Keybanc raised its price target to $140 from $122 (17% upside).
Norwegian regulator Datatilsynet ruled that behavioral advertising using physical locations and other information without user consent is illegal in the country. The regulator imposed a ban on the practice set to begin August 4, where Meta Platforms, Inc. (META) risks a fine of up to $100,000 each day should it not comply with Norwegian law. Stifel raised its price target to $336 from $280 (14% upside), while Deutsche Bank raised its price target to $350 from $290 (19% upside).
Green Thumb Industries Inc. (GTBIF) fell below the 50 and 100-day moving averages. The Teamsters Union “demanded action” after a Green Thumb employee perished on the job, citing “lack of air filtration, proper ventilation, and safety equipment” among key workplace safety issues.
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 7/14/23 - 7/21/23
| Name | Type | Net Return |
| Farfetch Limited | Equity | -12.0% |
| Amazon.com, Inc. | Equity | -3.5% |
| Alphabet Inc. | Equity | -4.3% |
| Meta Platforms, Inc. | Equity | -4.7% |
| Green Thumb Industries Inc. | Equity | -9.9% |
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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