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Nov 20, 2023

Opportunity Equity Weekly Update for 11/10/2023 – 11/17/2023

William Keenan

Expedia Rises on Reported ValueAct Stake while Alibaba Declines on Spinoff Reversal

Last week, the Opportunity Equity Strategy's representative gained 5.43%, outperforming the S&P 500’s 2.31% rise. (Exhibit 1). The strategy ended the week up 20.44% YTD, 115 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 11/17/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (11/10 - 11/17) 5.43% 2.31%
MTD 11.06% 7.77%
QTD 1.90% 5.51%
YTD 20.44% 19.29%
1 Year 9.83% 16.30%
5 Year 2.64% 12.45%
10 Year 6.60% 11.73%
Inception (annualized since 6/26/00) 6.37% 6.98%
Source: Bloomberg, Patient Capital Management.

Reuters reported that ValueAct Capital had purchased a stake in Expedia Group, Inc. (EXPE). Later in the week, Evercore ISI upgraded the shares from In Line to Outperform, raising its price target to $200 from $135 (47% upside).

Citigroup Inc. (C) rose above the 100 and 200-day moving averages. On Friday, the Financial Times reported that the next round of the bank’s restructuring and headcount reduction would be announced the following Monday.

Fincantieri shipyard announced that Norwegian Cruise Line Holdings Ltd. (NCLH) had taken delivery on Regent Seven Seas Cruise’s newest ship, Seven Seas Grandeur, in Ancona, Italy.

UBS Group AG (UBS) rose above the 50-day moving average. The bank received a temporary reprieve after France’s Supreme Court sent a dispute with French authorities to a lower court for a new trial, which accuses UBS of helping wealthy clients evade French taxes. At an event in Zurich, UBS CEO Sergio Ermotti reaffirmed that the UBS integration with Credit Suisse will not last beyond 2026.

Peloton Interactive, Inc. (PTON) rose above the 50-day moving average.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 11/10/23 - 11/17/23

Name Type Net Return
Expedia Group, Inc. Equity 14.9%
Citigroup Inc. Equity 7.8%
Peloton Interactive, Inc. Equity 21.9%
Norwegian Cruise Line Holdings Ltd. Equity 13.3%
UBS Group AG Equity

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

Alibaba Group Holding Limited (BABA) fell after the company announced it would reverse plans to spin off its cloud computing business. Instead of a breakup, Alibaba said it would focus on organic growth in cloud and declared its first cash dividend of $1 per ADS totaling $2.5B (5.2% annualized yield). Citi lowered its price target to $142 from $147 (83% upside), while Truist lowered its price target to $120 from $126 (55% upside).

SoFi Technologies, Inc. (SOFI) fell on asset-backed security financing concerns after the company presented at the Stephens Annual Investment Conference. Piper Sandler lowered its price target to $8.50 from $9 (24% upside), while Barclays initiated coverage with an $8 price target (17% upside).

Green Thumb Industries Inc. (GTBIF) fell on limited news.

Kosmos Energy Ltd. (KOS) followed oil prices lower over the course of the week.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 11/10/23 - 11/17/23

Name Type Net Return
Alibaba Group Holding Limited Equity -6.2%
*New Security*  Equity -2.3%
SoFi Technologies, Inc.  Equity -1.6%
Green Thumb Industries Inc. Equity  -1.2%
Kosmos Energy Ltd.  Equity -0.7%
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