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Nov 14, 2023

Opportunity Equity Weekly Update for 11/3/2023 – 11/10/2023

William Keenan

Amazon and Meta Rise on New Deal while General Motors Falls on Cruise Unit Concerns

Last week, the Opportunity Equity Strategy's representative account fell 1.65%, underperforming the S&P 500’s 1.35% rise. (Exhibit 1). The strategy ended the week up 14.24% YTD, 236 basis points behind the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 11/10/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (11/3 - 11/10) -1.65% 1.35%
MTD 5.34% 5.34%
QTD -3.35% 3.12%
YTD 14.24% 16.60%
1 Year 2.03% 13.47%
5 Year 1.22% 11.59%
10 Year 6.36% 11.66%
Inception (annualized since 6/26/00) 6.14% 6.88%
Source: Bloomberg, Patient Capital Management.

Following last week’s strong earnings report, Expedia Group, Inc. (EXPE), continued to rise throughout the week. Multiple reports called out Expedia for gaining global room night share in 3Q, a nice reversal from the concerns around market share losses earlier in the year. Susquehanna Financial raised its price target to $120 from $105 (1% upside)

Both Inc. (AMZN) and Meta Platforms. Inc. (META) rose after inking a new deal to facilitate Amazon shopping on Facebook and Instagram. Users will be able to link their Amazon accounts to their respective Facebook and Instagram accounts, allowing them to shop from promoted advertisements with real-time access to prime eligibility, pricing, delivery time estimates, and product details.

Uber Technologies Inc (UBER) reached a new 52-week high after reporting their second consecutive profitable quarter. Gross bookings grew 21% YoY beating consensus of $34.48B vs $35.28B actual. Revenue missed due to an accounting change coming in at $9.29B vs. $9.53B expected while EBITDA beat on higher profitability at $1.09B vs $1.02B expected. The company guided for 4Q bookings ahead of consensus at $37B vs $36.4B expected with EBITDA of $1.2B ahead of consensus of $1.15B. Citibank raised its price target to $67 from $60 (30% upside) while Wells Fargo maintained its overweight rating, raising its price target from $59 to $64 (24% upside).  

Coinbase Global Inc. (COIN) rose in sympathy with cryptocurrencies throughout the week, as Bitcoin reached a 52-week high on continued hopes of approval for a Bitcoin ETF

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 11/3/23 - 11/10/23

Name Type Net Return
Expedia Group, Inc. Equity 5.3%, Inc. Equity 3.6%
Uber Technologies Inc Equity 8.0%
Coinbase Global, Inc. Equity 8.3%
Meta Platforms, Inc. Equity

Source: Patient Capital Management. See below for additional information.

S4 Capital PLC (SFOR LN) fell after reporting third quarter earnings that fell short of expectations. Like-for-like net revenue growth fell 10% YoY as global macroeconomic conditions continue to pressure the business. Clients remain cautious, extending sales cycles. The company lowered full year margin expectations to 10-11% from 12-13.5% previously. Barclays lowered its price target to 80GBp from 95GBp (50% upside) while Peel Hunt cut its rating to a hold from add with a 55 GBp price target (3% upside), down from 110 GBp.

General Motors Company (GM) hit a 52-week low after GM’s self-driving unit Cruise recalled 950 Cruise Origin robotaxis from San Francisco following a collision with a pedestrian. California suspended their driverless permit late last month following the incident. In the meantime, production of the autonomous vehicle has been halted and the Cruise unit announced it will begin to lay off contract workers.

SoFi Technologies, Inc. (SOFI) fell through its 200-day moving average following the release of its 10-Q.  A number of sell-side reports highlighted that the gain on sale execution of 105% recognized in 3Q was the result of higher servicing assets rather than an up-front cash payment. 

Deutsche Bank downgraded Peloton Interactive Inc. (PTON) from a buy to a hold rating due to lack of growth clarity. 

Mattel, Inc. (MAT) fell on limited news.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 11/3/23 - 11/10/23

Name Type Net Return
S4 Capital PLC Equity -25.0%
General Motors Company   Equity -9.8% 
 SoFi Technologies, Inc.  Equity -13.4% 
Peloton Interactive, Inc.  Equity   -13.1%
Mattel, Inc.   Equity -4.8% 
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