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Oct 09, 2023

Opportunity Equity Weekly Update for 9/29/2023 – 10/6/2023

William Keenan

Alphabet Rises on AI-enabled Device Launch while GM Falls on Strike Concessions

Last week, the Opportunity Equity Strategy's representative account rose 1.07%, account fell -1.97%, underperforming the S&P 500’s 0.52% rise. (Exhibit 1). The strategy ended the week up 15.86% YTD, 220 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 10/6/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (9/29 - 10/6) -1.97% 0.52%
MTD -1.97% 0.52%
QTD -1.97% 0.52%
YTD 15.86% 13.66%
1 Year 7.03% 17.01%
5 Year 0.62% 10.24%
10 Year 6.80% 11.91%
Inception (annualized since 6/26/00) 6.23% 6.79%
Source: Bloomberg, Patient Capital Management.

Alphabet Inc. (GOOGL) rose above the 50-day moving average. At an event on Wednesday, Google launched a new Pixel 8 smartphone and Pixel Watch 2, which will further integrate Artificial Intelligence (AI) into their everyday functionality. Bank of America raised its price target to $146 from $142 (6% upside), while Piper Sandler lowered its price target to $147 from $148 (7% upside).

Meta Platforms, Inc. (META) rose above the 50-day moving average. The Wall Street Journal reported that in meetings with regulators, Meta has proposed a $14 ad-free subscription service for Instagram in Europe. Reuters reported that the company is preparing to lay off employees of its metaverse-oriented Reality Labs. JP Morgan lowered its price target to $400 from $425 (27% upside).

Coinbase Global, Inc. (COIN) rose above the 100-day moving average following Bitcoin prices higher over the course week. Bloomberg News reported that the United States Securities and Exchange Commission is pressing forward with its case against Coinbase, alleging that the company was offering cryptocurrency products that were in fact unregistered securities.

Karuna Therapeutics, Inc. (KRTX) rose after the company announced it would be presenting new data from its EMERGENT clinical trial program evaluating KarXT (xanomeline-trospium) in schizophrenia at the 36th European College of Neuropsychopharmacology (ECNP) Congress, on October 7-10, 2023, in Barcelona, Spain.

Bloomberg News reported that, Inc. (AMZN) launched and contacted its first satellites for Project Kuiper, the company’s satellite internet coverage initiative. The Wall Street Journal reported that according to redacted portions of the Federal Trade Commission’s monopoly lawsuit, Amazon used a secret algorithm code-named “Project Nessie” to test how much it could raise prices in a way that competitors would follow.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 9/29/23 - 10/6/23

Name Type Net Return
Alphabet Inc. Equity 5.1%
Meta Platforms, Inc. Equity 5.1%
Coinbase Global, Inc. Equity 4.5%
Karuna Therapeutics, Inc. Equity 3.0%, Inc. Equity 0.7%
Source: Patient Capital Management. See below for additional information.

Wells Fargo highlighted that its proprietary foot traffic tracker for OneMain Holdings, Inc. (OMF) indicated that September branch activity fell -13.5% m/m, implying that Q3 foot traffic was in-line with consensus origination estimates. Wells Fargo lowered its price target to $41 from $47 (9% upside), while Citi lowered its price target to $46 from $50 (22% upside).

General Motors Company (GM) fell after the United Auto Workers (UAW) labor union continued its strike for a third week. The UAW won a key concession in negotiations with General Motors enabling it to bring battery plant workers into the union’s fold.

Jefferies lowered its price target on Travel + Leisure Co. (TNL) to $39 from $44 (14% upside).

Mattel, Inc. (MAT) fell through the 50-day moving average.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 9/29/23 - 10/6/23

Name Type Net Return
OneMain Holdings, Inc. Equity -6.1%
*New Security* Equity -11.7%
Mattel, Inc. Equity -6.3%
General Motors Company Equity -1.8%
Travel + Leisure Co.  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