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Oct 03, 2023

Opportunity Equity Weekly Update for 9/22/2023 – 9/29/2023

William Keenan

Peloton Rises on lululemon Partnership while Amazon Falls on FTC Suit

Last week, the Opportunity Equity Strategy's representative account rose 1.07%, outperforming the S&P 500’s -0.71% decline. (Exhibit 1). The strategy ended the week up 18.19% YTD, 512 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 9/29/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (9/22 - 9/29) 1.07% -0.71%
MTD -5.18% -4.77%
QTD -5.74% -3.27%
YTD 18.19% 13.07%
1 Year 19.09% 19.79%
5 Year 0.12% 9.92%
10 Year 7.16% 11.85%
Inception (annualized since 6/26/00) 6.33% 6.77%
Source: Bloomberg, Patient Capital Management.

Peloton Interactive, Inc. (PTON) rose after the company announced a five-year global strategic partnership with lululemon, in which lululemon will become the primary athletic apparel partner to Peloton, and Peloton will become the exclusive digital fitness content provider for lululemon.

Norwegian Cruise Line Holdings Ltd. (NCLH) rose above the 200-day moving average after Carnival Cruise Lines reported 3Q FY 2023 earnings that exceeded consensus expectations.

Mattel, Inc. (MAT) announced it had promoted Executive Producer of Mattel Films, Robbie Brenner, to the newly created title of President of Mattel Films. Morgan Stanley initiated coverage with a $27 price target (23% upside).

Expedia Group, Inc. (EXPE) rose on limited news.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 9/122/23 - 9/29/23

Name Type Net Return
*New Security* Equity 14.7%
Peloton Interactive, Inc. Equity 13.0%
Norwegian Cruise Line Holdings Ltd. Equity 5.2%
Expedia Group, Inc. Equity 2.2%
Mattel, Inc. Equity 2.5%
Source: Patient Capital Management. See below for additional information.

PureTech Health PLC (PRTC LN) fell below the 50-day moving average. Karuna Therapeutics, a PureTech founded entity, announced the submission of a New Drug Application to the United States Food and Drug Administration using KarXT for the treatment of schizophrenia.

UBS Group AG (UBS) fell after Bloomberg News reported that the US Department of Justice stepped up its probe into Credit Suisse Group and UBS Group AG over suspected compliance failures that allowed Russian clients to evade sanctions., Inc. (AMZN) fell through the 100-day moving average after the United States Federal Trade Commission sued the company in Seattle Federal Court, accusing Amazon of monopolizing online marketplace services by degrading quality for shoppers and overcharging sellers.

Delta Air Lines, Inc. (DAL) CEO Ed Bastian disclosed that the airline is planning to make modifications to its recently announced frequent flyer program overhaul. Bastian highlighted that there was “no question we probably went too far” with the changes. Bernstein lowered its price target to $61 from $62 (65% upside), while Jefferies lowered its price target to $50 from $60 (35% upside).

S&P downgraded S4 Capital PLC (SFOR LN)’s credit rating to B+ from BB-, with a stable outlook.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 9/22/23 - 9/29/23

Name Type Net Return
PureTech Health PLC Equity -14.0%
UBS Group AG Equity -3.2%, Inc. Equity -1.6%
Delta Air Lines, Inc. Equity -1.8%
S4 Capital PLC  Equity -3.7%
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