Amazon Rises on Record Profitability while Expedia Falls on Lower Guidance
Last week, the Opportunity Equity Strategy's representative account fell 0.85%, underperforming the S&P 500’s 0.56% rise. (Exhibit 1). The strategy ended the week up 7.31% YTD, 68 basis points behind the S&P 500.Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 5/3/241
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (4/26 - 5/3) | -0.85% | 0.56% |
| MTD | 1.07% | 1.84% |
| QTD | -4.31% | -2.32% |
| YTD | 7.31% | 7.99% |
| 1 Year | 41.93% | 27.32% |
| 5 Year | 7.40% | 13.60% |
| 10 Year | 8.11% | 12.63% |
| Inception (annualized since 6/26/00) | 7.22% | 7.44% |
Source: Bloomberg, Patient Capital Management.
IAC Inc. (IAC) moved through the 50-day, 100-day, and 200-day moving averages after being added to the S&P 600 SmallCap Index. KeyBanc decreased their price target from $72 to $64 (16% upside).
Amazon.com, Inc. (AMZN) rose after reporting earnings with record high operating profit margins. The company delivered revenue ahead of consensus at $143.3B vs. $142.6B expected and operating profit of $15.3B (10.7% margin) vs. $11.1B (7.8% margin) expected. The company laid out second quarter revenue guidance of $144B - $149B and operating income guidance of $10 - $14B. JP Morgan increased their price target from $220 to $225 (21% upside) while Citi increased their price target from $235 to $245 (32% upside).
Alibaba Group Holding Ltd (BABA) moved through the 200-day moving average on limited news. Morningstar downgraded the name to a hold while maintaining their $94 price target (16% upside).
Delta Air Lines, Inc. (DAL) reached a new 52-week high on limited news.
Green Thumb Industries Inc. (GTBIF) hit a new 52-week high after Attorney General, Merrick Garland circulated a proposal to reschedule cannabis from a schedule 1 to a schedule 3 drug. Canaccord Genuity decreased their price target from $21.37 to $21.24 (61% upside) and Morningstar increased their price target from $23.24 to $24.00 (82% upside).
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 4/26/24 - 5/3/24
| Name | Type | Net Return |
| IAC Inc. | Equity | 13.3% |
| Amazon.com, Inc. | Equity | 3.7% |
| Alibaba Group Holding Ltd | Equity | 7.7% |
| Delta Air Lines, Inc. | Equity | 3.2% |
| Green Thumb Industries Inc. | Equity |
8.0% |
Source: Patient Capital Management. See below for additional information.
Expedia Group, Inc. (EXPE) fell through the 50-day and 200-day moving averages despite reporting earnings that beat on both the top and bottom line. The company delivered revenue of $2.9B vs. $2.8B expected and adjusted EPS of $0.21 vs. -$0.24 expected. While earnings beat, the company lowered its 2024 outlook to mid-to-high-single-digits topline growth vs prior +10% guidance along with flat EBITDA margins versus prior guidance for expansion. The decline in expectations is the result of a slower recover in Vrbo, their home rental offering. Goldman Sachs decreased their price target from $195 to $182 (58% upside) while Piper Sandler downgraded the name to neutral, decreasing their price target from $175 to $145 (26% upside).
Norwegian Cruise Line Holdings Ltd. (NCLH) fell through the 50-day, 100-day, and 200-day moving averages despite reporting earnings in line with consensus, record high advanced ticket sales, and improved guidance. The company reported revenue of $2.19B vs. $2.22B expected with adjusted EPS of $0.16 vs. $0.11 expected, and $3.8B in advanced ticket sales (up 13% YoY). The company raised their 2024 adjusted EPS guidance to $1.32 from $1.23 previously. Morningstar increased their price target from $29 to $30 (88% upside) while JP Morgan decreased their price target from $20 to $19 (19% upside).
CVS Health Corp (CVS) fell, hitting a 52-week low after reporting revenue of $88.4B vs. $89.3B expected and adjusted EPS of $1.31 vs. $1.69 expected. The company reported Medicaid costs ~$900M above consensus which is expected to take longer to improve. The company lowered their 2024 adjusted EPS guidance to >$7.00 from >$8.30 previously. Goldman Sachs decreased their price target from $85 to $74 (32% upside) and Deutsche Bank decreased their price target from $77 to $66 (18% upside).
SoFi Technologies, Inc. (SOFI) fell through the 50-day moving average despite reporting earnings that beat expectations. The company delivered revenue of $580M vs. $558M expected and adjusted EBITDA of $144M ahead of consensus of $122M. Full year guidance was revised upwards while 2Q guidance was below expectations.
Alphabet Inc. (GOOGL) fell on limited news. Loop capital increased their price target from $155 to $170 (2% upside).
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 4/26/24 - 5/3/24
| Name | Type | Net Return |
| Expedia Group, Inc. | Equity | -15.0% |
| Norwegian Cruise Line Holdings Ltd. | Equity | -16.0% |
| CVS Health Corp | Equity | -16.8% |
| SoFi Technologies, Inc. | Equity | -11.6% |
| Alphabet Inc. | Equity | -2.7% |
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
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