Coinbase Rises on Earnings while Seadrill Declines on Limited News
Last week, the Opportunity Equity Strategy's representative account account rose 2.39%, outperforming the S&P 500’s -0.35% decline. (Exhibit 1). The strategy ended the week up 2.39% YTD, 276 basis points behind the S&P 500.Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 2/16/241
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (2/9 - 2/16) | 2.39% | -0.35% |
| MTD | 3.47% | 3.41% |
| QTD | 2.39% | 5.15% |
| YTD | 2.39% | 5.15% |
| 1 Year | 18.42% | 24.37% |
| 5 Year | 6.58% | 14.44% |
| 10 Year | 7.48% | 12.63% |
| Inception (annualized since 6/26/00) | 7.08% | 7.39% |
Source: Bloomberg, Patient Capital Management.
Coinbase, Inc. (COIN) rose above the 50-day moving average after reporting 4Q 2023 results. The company reported revenue of $954M above consensus of $826M with adjusted EBITDA coming in above consensus at $305M vs $251M expected. Adjusted EPS of $1.04 beat the street at $0.01. For 1Q 2024, management guided for subscription and services revenue of $410M-$480M, and General & Administrative spend of $600M-$650M. JMP raised its price target to $220 from $200 (22% upside), while Canaccord raised its price target to $240 from $140 (33% downside).
IAC, Inc. (IAC) rose above the 200-day moving average after announcing 4Q results that exceeded consensus expectations. Consolidated revenues and were in-line at $1.1B, while adjusted EBITDA came in at $157M vs $124M expected. The company guided for a 2024 FY24 adjusted EBITDA outlook of $370M at the midpoint vs. $429M for consensus, with an operating loss of -$25M at the midpoint vs. consensus at $55M. Truist raised its price target to $80 from $77 (40% upside), while Barclays raised its price target to $72 from $62 (26% upside).
One Main Holdings, Inc. (OMF) named current Chief Strategy Officer Jenny Osterhout CFO, while current CFO Micah Conrad was named COO, replacing Rajive Chadha who will serve as a senior advisor.
Crocs, Inc. (CROX) rose after reporting 4Q results that exceeded consensus expectations. Revenue came in at $960M vs $958M expected, while EBITDA beat at $245M vs $226M expected. FCF came in well ahead at $320M vs $232M for the street. For FY 2024, management guided for an adjusted operating margin of 25%, in-line with consensus, and diluted EPS of $12.28 at the midpoint vs $11.90 expected. During the quarter, Crocs repaid $277M of debt, reducing its net leverage to 1.3x, while repurchasing $25M worth of shares for an average price of $86.34. S&P upgraded Crocs to BB from BB- with a stable outlook. Raymond James raised its price target to $145 from $120 (22% upside), while Piper Sandler raised its price target to $140 from $135 (18% upside).
Uber Technologies, Inc. (UBER) reached a new 52-week high after issuing a robust 3-year outlook. Through FY 2026, the company expects to compound gross bookings in the mid-to-high teens on an annualized basis, Adjusted EBITDA in the high 30s to low 40% range and convert at least 90% of adjusted EBITDA into FCF. Uber also authorized its inaugural share repurchase for $7B (4% of shares outstanding). JMP raised its price target to $85 from $76 (8% upside), while Deutsche Bank raised its price target to $95 from $82 (16% upside).
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 2/9/24 - 2/16/24
| Name | Type | Net Return |
| Coinbase Global, Inc. | Equity | 27.0% |
| IAC Inc. | Equity | 7.6% |
| OneMain Holdings, Inc. | Equity | 6.0% |
| Crocs, Inc. | Equity | 10.6% |
| Uber Technologies, Inc. | Equity |
10.6% |
Source: Patient Capital Management. See below for additional information.
Alphabet Inc. (GOOGL) fell through the 50-day moving average. CEO of Google DeepMind, Demis Hassabis announced the release of the company’s latest AI model, Gemini 1.5.
Filings revealed that Amazon.com, Inc. (AMZN) Executive Chairman Jeff Bezos sold 36M at roughly $170 per share during the previous week, for total proceeds of ~$6B.
Seadrill Limited (SDRL) fell through the 100 and 200-day moving averages.
Delta Air Lines, Inc. (DAL) announced $1.4B of profit sharing with its global workforce, equivalent to 10.4% of annual average compensation per colleague.
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 2/9/24 - 2/16/24
| Name | Type | Net Return |
| Alphabet Inc. | Equity | -5.6% |
| *New Security* | Equity | -8.3% |
| Amazon.com, Inc. | Equity | -2.8% |
| Seadrill Limited | Equity | -3.0% |
| Delta Air Lines, Inc. | Equity | -1.0% |
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
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