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Aug 14, 2023

Opportunity Equity Weekly Update for 8/4/2023 – 8/11/2023

William Keenan

Precigen Rises on FDA Approval while IAC Falls on Earnings

Last week, the Opportunity Equity Strategy's representative account declined -0.65%, underperforming the S&P 500’s -0.27% fall. (Exhibit 1). The strategy ended the week up 26.39% YTD, 896 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 8/11/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (8/4 - 8/11) -0.65% -0.27%
MTD -6.61% -2.67%
QTD 0.80% 0.46%
YTD 26.39% 17.43%
1 Year 2.41% 7.92%
5 Year 1.98% 11.44%
10 Year 8.29% 12.31%
Inception (annualized since 6/26/00) 6.67% 6.99%
Source: Bloomberg, Patient Capital Management.

Expedia Group, Inc. (EXPE) rebounded after reporting Q2 results during the previous week. Citi raised its price target to $115 from $105 (3% upside).

Precigen, Inc. (PGEN) rose above the 50, 100, and 200-day moving averages after reporting 2Q results where the company announced it had received approval from the FDA to use its Phase ½ single arm study of PRGN-2012 in recurrent respiratory papillomatosis (RRP) for accelerated approval. As of the end of the quarter, PGEN had $95.6M in cash and cash equivalents, which it expects will fund operations through 2025. Cantor Fitzgerald raised its price target to $11 from $10 (614% upside).

Mattel, Inc. (MAT) rose after the Barbie Movie’s global box office sales surpassed $1B.

UBS Group AG (UBS) rose after the company eliminated a $10B backstop allowance with the Swiss Government for potential losses, in a sign of strength for the bank.

Travel + Leisure Co. (TNL) rose above the 50-day moving average. Truist lowered its price target to $66 from $67 (60% upside).

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 8/4/23 - 8/11/23

Name Type Net Return
Expedia Group, Inc. Equity 8.1%
Precigen, Inc. Equity 38.4%
Mattel, Inc. Equity 5.6%
UBS Group AG Equity 6.8%
Travel + Leisure Co. Equity 5.0%
Source: Patient Capital Management. See below for additional information.

IAC Inc (IAC) fell through the 50-day moving average after announcing 2Q results that fell short of consensus expectations. Consolidated revenues and adjusted EBITDA came in at $1.1B and $70M, in-line with estimates at $1.1B and $72M, respectively. FCF was well short at $17M vs. $109M for consensus, driven by CapEx of -$86M vs. -$25M expected. EPS disappointed as well at -$1.07 vs. -$0.63 for the street. The company maintained its FY23 adjusted EBITDA outlook for $380M at the midpoint vs. $335M for consensus, while raising its operating profitability guidance to -$170M from -$180M previously, vs. consensus at -$140M. TD Cowen lowered its price target to $78 from $88 (33% upside), while JP Morgan lowered its price target to $80 from $85 (36% upside).

General Motors Company (GM) fell through the 100-day moving average after Bloomberg News reported that the United Auto Workers union (UAW) made demands of the largest US automakers for incremental wages of over $80B, or $150 per hour, up from $64 currently.

SoFi Technologies, Inc. (SOFI) and Peloton Interactive, Inc. (PTON) fell below the 50-day moving averages.

Cleveland-Cliffs Inc. (CLF) fell on limited news.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 8/4/23 - 8/11/23

Name Type Net Return
IAC Inc Equity -8.0%
General Motors Inc. Equity -7.3%
SoFi Technologies, Inc. Equity -8.9%
Peloton Interactive, Inc. Equity -12.8%
Cleveland-Cliffs Inc. Equity -8.7%
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