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Dec 19, 2023

Opportunity Equity Weekly Update for 12/8/2023 – 12/15/2023

William Keenan

Delta Continues to Rise on Strong Travel Outlook while Alphabet Falls on Epic Games Antitrust Ruling

Last week, the Opportunity Equity Strategy's representative account gained 3.76%, outperforming the S&P 500’s 2.53% rise. (Exhibit 1). The strategy ended the week up 34.43% YTD, 954 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 12/15/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (12/8 - 12/15) 3.76% 2.53%
MTD 9.05% 3.39%
QTD 13.74% 10.45%
YTD 34.43% 24.89%
1 Year 31.06% 23.16%
5 Year 7.12% 14.61%
10 Year 7.62% 12.37%
Inception (annualized since 6/26/00) 6.85% 7.16%
Source: Bloomberg, Patient Capital Management.

OneMain Holdings, Inc. (OMF) issued $700M worth of senior notes due 2030 priced to yield 8%. OneMain plans to use the proceeds to redeem the remainder of its 6.125% notes due 2024, and for general corporate purposes.

SoFi Technologies, Inc. (SOFI) rose above the 100-day moving average. Director Richard Costolo announced his resignation from the Board of Directors effective December 20th.

Bloomberg Intelligence highlighted Norwegian Cruise Line Holdings Ltd. (NCLH) and its goal of reaching “high-grade-like” credit metrics, as it continues to repair its balance sheet in the wake of the Covid-19 pandemic. Stifel raised its price target to $23 from $18 (13% upside), while Barclays raised its price target to $20 from $14 (-2% downside)

Delta Air Lines, Inc. (DAL) CEO Ed Bastian highlighted in an interview with CNBC that he expects “another strong year” for international travel in 2024, and Christmas travel “equally as strong” as Thanksgiving. Later in the week, Delta canceled flights to Tel Aviv, Israel through March 29th, 2024.

Capital One Financial Corporation (COF) was raised to equal weight at Morgan Stanley with a $120 price target (-7% downside).

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 12/8/23 - 12/15/23

Name Type Net Return
OneMain Holdings, Inc. Equity 6.9%
SoFi Technologies, Inc. Equity 15.0%
Norwegian Cruise Line Holdings Ltd. Equity 9.0%
Capital One Financial Corporation Equity 9.8%
Delta Air Lines, Inc. Equity

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

Green Thumb Industries Inc. (GTBIF) announced its intention to open a new RISE dispensary in Port Orange, Florida on December 15th – its 90th retail location in the United States.

Alphabet Inc. (GOOGL) fell below the 50 and 100-day moving averages. A San Francisco District Court jury unanimously found that Google had violated antitrust laws in its dispute with Epic Games over Google Play’s 30% take rate on all purchases. Google commented that it plans to appeal the verdict.

TD Cowen lowered its price target on CVS Health Corporation (CVS) to $99 from $102 (33% upside). During the previous week, CVS held an investor day where it outlined FY 2024 revenue guidance of at least $366B, adjusted operating income of at least $17.24B, adjusted EPS of at least $8.50, and Cash flow from operations of at least $12.5B. From 2024 to 2026, CVS expects to generate at least $7B in Free cash flow annually ($5.43 per share, 7.3% yield).

S4 Capital PLC (SFOR LN) declined on limited news.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 12/8/23 - 12/15/23

Name Type Net Return
Green Thumb Industries Inc. Equity -8.6%
Alphabet Inc.  Equity -1.7%
S4 Capital PLC  Equity -5.9%
*New Security* Equity  -4.2%
CVS Health Corporation  Equity -0.9%
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