Opportunity Equity Weekly Update for 7/19/2024 – 7/26/2024

Everi Jumps on Acquisition Announcement while General Motors Reports Strong Earnings

Last week, the Opportunity Equity Strategy’s representative account gained 3.45%, trouncing the S&P 500’s -0.82% loss. (Exhibit 1). The strategy ended the week up 16.25% YTD, 90 basis points behind the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 7/26/24¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (7/19 - 7/26)	3.45%	-0.82%
MTD	5.47%	0.05%
QTD	5.47%	0.05%
YTD	16.25%	15.35%
1 Year	23.32%	21.35%
5 Year	9.98%	14.39%
10 Year	8.49%	12.75%
Inception (annualized since 6/26/00)	7.51%	7.66%

Everi Holdings Inc. (EVRI) rose through the 100-day and 200-day moving averages after announcing they have entered into a definitive agreement to be acquired for $14.25 per share (11% premium over Friday’s close) by Apollo Global Management, Inc. The deal is expected to close in the third quarter of 2025.

Mattel, Inc. (MAT) rose through the 50-day, 100-day, and 200-day moving averages following earnings. The company delivered adjusted EPS of $0.19 vs. $0.17 expected and expanded gross margins to 49.2% vs. 46.9% expected, up ~430bps YoY. The company also bought back $100M shares in Q2, bringing their 2024 total to $200M (~3% of the current market cap). JP Morgan increased their price target from $21 to $22 (15% upside).

OneMain Holdings, Inc. (OMF) rose to a new 52-week high as the market gained more conviction of a September rate cut by the Federal Reserve.

Illumina, Inc. (ILMN) rose through the 100-day and 200-day moving averages on limited news.

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 7/19/24 - 7/26/24

Name	Type	Net Return
New Security *	Equity	117.7%
Everi Holdings Inc.	Equity	54.8%
Mattel, Inc.	Equity	21.4%
OneMain Holdings, Inc.	Equity	3.5%
Illumina, Inc.	Equity	5.2%

Expedia Group, Inc. (EXPE) fell through the 200-day and 100-day moving averages on a Bernstein report that app users and web traffic decelerated through the second quarter. Jefferies raised their price target from $125 to $140. (11% upside).

Alphabet Inc. (GOOGL) reported revenue of $71.36B vs. $70.75B expected but narrowly missed on the bottom line, delivering adjusted EPS of $1.89 vs. $1.91 expected. The profitability miss was primarily driven by an increased CAPEX spend of $13.2B vs. $12.25B expected. The company reiterated full year CAPEX guidance of ~$48B. Goldman Sachs increased their price target from $211 to $217 (30% upside).

General Motors Co (GM) fell through the 50-day and 200-day moving averages despite beating on both the top and bottom line, reporting revenue of $47.9B vs. $45.6B expected and adjusted EPS of $3.06 vs. $2.71 expected. The beat was primarily driven by General Motors North America, (GMNA), posting adjusted EBIT of $4.4B (10.9% margin) vs. $3.8B expected (10.0% margin). The company raised their full year adjusted EPS guidance from $9.50 to $10.00 at the midpoint. Citi raised their price target from $96 to $98. (122% upside).

Biogen Inc. (BIIB) fell through the 100-day moving average after the European Medicines Agency (EMA) issued a negative opinion on the use of Leqembi, the company’s Alzheimer’s drug. This is not a final regulatory decision. Piper Sandler lowered their price target from $313 to $307 (45% upside).

Bank of America raised their price target on Norwegian Cruise Line Holdings Ltd. (NCLH) from $20 to $23. (24% upside).

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 7/19/24 - 7/26/24

Name	Type	Net Return
Expedia Group, Inc.	Equity	-7.2%
Alphabet Inc.	Equity	-6.0%
General Motors Co	Equity	-7.4%
Biogen Inc.	Equity	-6.4%
Norwegian Cruise Line Holdings Ltd.	Equity	-6.1%

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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. 

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