Seadrill Rises on Earnings while SoFi Declines on Capital Raise
Last week, the Opportunity Equity Strategy's representative account fell -0.06%, outperforming the S&P 500’s -0.23% decline. (Exhibit 1). The strategy ended the week up 6.53% YTD, 120 basis points behind the S&P 500.Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 3/8/241
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (3/1 - 3/8) | -0.06% | -0.23% |
| MTD | 1.05% | 0.58% |
| QTD | 6.53% | 7.73% |
| YTD | 6.53% | 7.73% |
| 1 Year | 29.23% | 30.43% |
| 5 Year | 8.69% | 15.23% |
| 10 Year | 7.56% | 12.64% |
| Inception (annualized since 6/26/00) | 7.24% | 7.48% |
Source: Bloomberg, Patient Capital Management.
Coinbase Global, Inc. (COIN) followed bitcoin prices higher over the course of the week. Goldman Sachs upgraded the name to neutral from sell, raising its price target to $282 from $170 (10% upside).
UBS Group AG (UBS) rose above the 50-day moving average as Morgan Stanley upgraded the name to overweight, raising its price target to $38 from $33 (23% upside).
Citigroup Inc. (C) rose after CEO Jane Fraser spoke at the RBC Global Financial Institutions Conference where she reiterated FY 2024 expense guidance of $53.5B-$53.8B and highlighted the significant progress the bank has made simplifying its organizational structure since its 2022 investor day. Wells Fargo’s Mike Mayo reiterated Citi as his top pick on CNBC later in the week, likening Citi’s turnaround to Proctor & Gamble’s successful reorganization.
Seadrill Limited (SDRL) rose through the 50-day moving average after the company reported solid 4Q 2023 results during the week prior. Revenue missed at $402M vs. $408M expected, while adjusted EBITDA beat at $113M vs $100M for consensus. In FY 2024, management guided for revenues of $1.5B at the midpoint, and adjusted EBITDA at the midpoint of $425M – both in-line with consensus. Seadrill authorized an incremental $250M share repurchase authorization in December, bringing the total authorization to $500M. Through February 27th, the company had repurchased $342M worth of shares, or 11% of total share capital.
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 3/1/24 - 3/8/24
| Name | Type | Net Return |
| Coinbase Global, Inc. | Equity | 24.7% |
| UBS Group AG | Equity | 6.6% |
| Citigroup Inc. | Equity | 3.4% |
| *New Security* | Equity | 6.4% |
| Seadrill Limited | Equity |
5.5% |
Source: Patient Capital Management. See below for additional information.
IAC Inc. (IAC) fell through the 50 and 100-day moving averages.
SoFi Technologies, Inc. (SOFI) fell through the 50, 100, and 200-day moving averages after the company priced a $750M convertible bond offering at 1.25% due 2029. While the issue has a strike price of $9.45, SoFi entered into a capped call option to synthetically raise the dilution threshold to $14.54. The proceeds will be used to redeem its 12.5% Series 1 Preferred stock and for general corporate purposes.
Kosmos Energy Ltd. (KOS) fell through the 50-day moving average after the company priced a $350M convertible bond at 3.125% due 2030. While the issue has a strike price of $7.02, the company entered into a capped call option to synthetically raise the dilution threshold to $10.80. The proceeds from the offering will be used to pay down the company’s revolving line of credit.
Canada Goose Holdings Inc. (GOOS) CFO Jonathan Sinclair presented at the Raymond James Institutional Investors Conference, where he reiterated his optimism that the long-term strategy for the company remains intact, with growth in China still in its early stages.
General Motors Company (GM) declined on limited news.
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 3/1/24 - 3/8/24
| Name | Type | Net Return |
| IAC Inc. | Equity | -9.2% |
| SoFi Technologies, Inc. | Equity | -14.2% |
| Kosmos Energy Ltd. | Equity | -11.4% |
| Canada Goose Holdings Inc. | Equity | -6.0% |
| General Motors Company | Equity | -3.6% |
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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