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Dec 27, 2023

Opportunity Equity Strategy Update for 12/15/2023 - 12/22/2023

William Keenan

Karuna Rises on Acquisition by Bristol Myers while Airlines Decline on Limited News

Last week, the Opportunity Equity Strategy's representative account gained 4.18%, outperforming the S&P 500’s 0.77% rise. (Exhibit 1). The strategy ended the week up 40.05% YTD, 1,420 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 12/22/231

Time Period Opportunity Equity Representative Account S&P 500
Last Week (12/15 - 12/22) 4.18% 0.77%
MTD 13.61% 4.18%
QTD 18.49% 11.31%
YTD 40.05% 25.85%
1 Year 42.46% 26.46%
5 Year 10.78% 16.47%
10 Year 7.76% 12.18%
Inception (annualized since 6/26/00) 7.03% 7.19%
Source: Bloomberg, Patient Capital Management.

Karuna Therapeutics, Inc. (KRTX) rose after the company agreed to be acquired by Bristol Myers Squibb for $330 per share – a 53% premium over Thursday’s closing price. The transaction has a total equity value of $14.0 billion, or $12.7 billion net of estimated cash acquired.

Citi raised its price target on Expedia, Inc. (EXPE) to $155 from $115 (0% upside), while Argus raised its price target to $171 from $158 (10% upside).

Coinbase Global, Inc. (COIN) followed Bitcoin prices higher over the course of the week. JMP raised its price target to $200 from $107 (14% upside), while Compass Point raised its price target to $200 from $145 (14% upside).

PureTech Health PLC (PRTC LN) rose through the 50 and 100-day moving averages after its founded entity, Karuna Therapeutics, agreed to be acquired by Bristol Myers Squibb.

Alphabet Inc. (GOOGL) rose above the 50 and 100-day moving averages. The Information reported that Google is planning a major restructuring of its 30,000 strong ad sales team, as part of its efforts to increasingly utilize artificial intelligence and machine learning in its ad-buying process.

Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 12/15/23 - 12/22/23

Name Type Net Return
Karuna Therapeutics, Inc. Equity 44.4%
Expedia Group, Inc. Equity 6.4%
Coinbase Global, Inc. Equity 18.7%
PureTech Health PLC Equity 24.4%
Alphabet Inc. Equity

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

Canada Goose Holdings Inc. (GOOS) appointed Beth Clymer to the newly created position of President, Finance, Strategy & Administration reporting directly to Chairman and CEO Dani Reiss. Ms. Clymer previously worked directly with Canada Goose as an Operating Partner at strategic investor Bain Capital from 2015-2019.

United Airlines Holdings Inc. (UAL) fell below the 100-day moving average and announced the retirement of Executive Vice President and Special Advisor Greg Hart effective September 30th, 2024. Mr. Hart had previously served as United’s Chief Operating Officer from 2014 to 2020. TD Cowen raised its price target to $55 from $47 (29% upside).

Peloton Interactive, Inc. (PTON) announced the addition of Chris Bruzzo to its Board of Directors. Citi lowered its price target to $10 from $13 (67% upside).

Delta Air Lines, Inc. (DAL) declined on limited news.

Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 12/15/23 - 12/22/23

Name Type Net Return
Canada Goose Holdings Inc. Equity -5.0%
Delta Air Lines, Inc.  Equity -2.9%
United Airlines Holdings, Inc.  Equity -2.4%
Peloton Interactive, Inc. Equity  -2.8%
*New Security*  Equity -6.4%
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