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Sep 05, 2023

Opportunity Equity Weekly Update for 8/25/2023 – 9/1/2023

William Keenan

UBS Rises on Earnings while Green Thumb Rises on HHS Recommendation

Last week, the Opportunity Equity Strategy's representative account gained 4.67%, outperforming the S&P 500’s 2.55% rise. (Exhibit 1). The strategy ended the week up 25.85% YTD, 690 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 9/1/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (8/25 - 9/1) 4.67% 2.55%
MTD 0.97% 0.19%
QTD 0.37% 1.76%
YTD 25.85% 18.95%
1 Year 11.00% 15.79%
5 Year 0.91% 11.16%
10 Year 8.54% 12.83%
Inception (annualized since 6/26/00) 6.64% 7.03%
Source: Bloomberg, Patient Capital Management.

Green Thumb Industries Inc. (GTBIF) rose above the 50, 100, and 200-day moving averages after the U.S. Department of Health and Human Services (HHS) recommended that cannabis should be moved from a Schedule I to Schedule III controlled substance.

UBS Group AG (UBS) rose after earnings beat consensus estimates. Revenue came in at $9.5B vs. $8.5B expected, while EPS came in at $8.99 vs. $0.54 for the street due to booking a one-time $29B in negative goodwill gains from the acquisition of Credit Suisse. The company beat on both net interest income (NII) coming in at $1.7B vs $1.6B expected and net fees & commission income. For FY23 Guidance, management expects positive underlying profit before tax (PBT) for 2H23 with sequential improvement driven by revenue stabilization, cost savings of $3B, and lower funding costs. UBS’s CET1 capital ratio is expected to remain at 14% by year-end. The company now expects the Credit Suisse integration to be complete by 2026, an acceleration from its original 2027 goal. Bank of America raised its price target to $34 from $30 (29% upside)., Inc. (AMZN) announced it had reached an agreement with Shopify to add the Amazon “Buy with Prime” checkout button to the Shopify website.

Alphabet Inc. (GOOGL) announced that Google Cloud would enter a strategic partnership with NVIDIA to advance AI computing, software, and services.

OneMain Holdings, Inc. (OMF) rose on limited news.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 8/25/23 - 9/1/23

Name Type Net Return
Green Thumb Industries Inc. Equity 39.9%
OneMain Holdings, Inc. Equity 5.7%
UBS Group AG Equity 7.2% Inc Equity 3.6%
Alphabet Inc. Equity 4.4%
Source: Patient Capital Management. See below for additional information.

Norwegian Cruise Line Holding Ltd. (NCLH) was named a top high yield idea by Bank of America, citing management’s capital allocation priority of repairing the balance sheet.

Farfetch Limited (FTCH) fell on limited news.

JP Morgan Chase & Co. (JPM) fell slightly on limited news.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 8/25/23 - 9/1/23

Name Type Net Return
Norwegian Cruise Line Holding Ltd. Equity -3.0%
New Security* Equity -2.5%
Farfetch Limited Equity -4.4%
JP Morgan Chase & Co. Equity -0.2%
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