Opportunity Equity Strategy Update for 9/15/2023 - 9/22/2023

Splunk Rises on Cisco Acquisition while S4 Capital Falls on Earnings

Last week, the Opportunity Equity Strategy's representative account fell -5.07%, underperforming the S&P 500’s -2.91% decline. (Exhibit 1). The strategy ended the week up 16.94% YTD, 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 9/22/23¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (9/15 - 9/22)	-5.07%	-2.91%
MTD	-6.18%	-4.08%
QTD	-6.74%	-2.58%
YTD	16.94%	13.88%
1 Year	11.80%	16.91%
5 Year	-0.31%	9.96%
10 Year	6.95%	11.81%
Inception (annualized since 6/26/00)	6.28%	6.81%

Splunk Inc. (SPLK) rose after Cisco announced it had agreed to purchase the company for $28B, or $157 per share, representing a 31% premium to the previous closing price on Wednesday. The transaction is expected to close by the end of 3Q CY2024. Truist raised its price target to $157 from $130 (8% upside), while RBC raised its price target to $157 from $132 (8% upside).

Dow Jones reported Alibaba Group Holding Limited (BABA) unveiled a plan to invest $2B in Turkey, including a data and logistics center in Ankara, and an export-operations center at Istanbul Airport. The investments will be made through the company’s e-commerce unit, Trendyol. Later in the week, Bloomberg news reported that Cainiao Network Technology Co., Alibaba’s logistics arm, was planning to file for its Hong Kong IPO as soon as next week.

Reuters reported that Cleveland-Cliffs Inc. (CLF) and potential acquisition target US Steel are locked in negotiations over a confidentiality pact that would allow Cleveland-Cliffs to participate in a sale process for the company.

Mattel, Inc. (MAT) rose above the 50-day moving average.

Energy Transfer LP (ET) rose on limited news.


Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 9/15/23 - 9/22/23

Name	Type	Net Return
Splunk Inc.	Equity	20.1%
Mattel, Inc.	Equity	2.0%
Energy Transfer LP	Equity	1.7%
Alibaba Group Holding Limited	Equity	1.4%
Cleveland-Cliffs, Inc.	Equity	1.3%

S4 Capital PLC (SFOR LN) fell after reporting 1H FY 2023 results that fell short of expectations and lowering its FY 2023 guidance. Revenue came in at £517M, while EBITDA came in at £37M vs £41M expected. EPS came in short of consensus expectations at 2p vs 4p expected. S4 lowered its FY 2023 revenue to less than £908M, vs. £998M previously, which fell short of consensus at £1.03B. EBITDA margin guidance of 12.75% at the midpoint implied EBITDA of £116M which was also well short of expectations at £140M. Barclays lowered its price target to £0.95 from £2.15 (36% upside), while Citi lowered its price target to £2.50 from £3.25 (258% upside). 

Amazon.com, Inc. (AMZN) fell below the 50-day moving average. The company made a number of announcements throughout the week. On Monday, the company announced it would hire 250,000 employees throughout the U.S. on a full-time, seasonal, and part-time basis to help bolster its delivery network for the upcoming holiday season. On Wednesday, the company released the Amazon Echo Show 8, the all-new Echo Hub, and Echo Frame eyeglasses. Amazon also released the Eero Max-7 Wi-Fi mesh system, and an all-new Fire TV Stick 4K Max. On Friday, the company announced it would begin advertising on Prime Video in the United States and Western Europe in early 2024, with a new ad-free subscription available for $2.99 per month.

Coinbase Global, Inc. (COIN) fell through the 100-day moving average. The company announced the completion of its cash tender offer for $180M of its 3.625% senior notes due 2031.

SoFi Technologies, Inc. (SOFI) fell through the 50 and 100-day moving averages.

Expedia Group, Inc. (EXPE) fell through the 100 and 200-day moving averages.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 9/15/23 - 9/22/23

Name	Type	Net Return
S4 Capital PLC	Equity	-26.9%
Amazon.com, Inc.	Equity	-8.0%
SoFi Technologies Inc.	Equity	-16.9%
Expedia Group, Inc.	Equity	-5.6%
Coinbase Global, Inc.	Equity	-13.6%

---

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