Opportunity Equity Weekly Update for 7/26/2024 – 8/2/2024

Meta Rises on a Strong Q2 Results while OneMain Financial Falls on Macro Weakness

Last week, the Opportunity Equity Strategy’s representative account fell -9.65%, underperforming the S&P 500’s -2.05% loss. (Exhibit 1). The strategy ended the week up 5.04% YTD, 795 basis points behind the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 8/2/24¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (7/26 - 8/2)	-9.65%	-2.05%
MTD	-7.49%	-3.18%
QTD	-4.71%	-2.00%
YTD	5.04%	12.99%
1 Year	12.85%	20.24%
5 Year	8.15%	14.63%
10 Year	7.90%	12.82%
Inception (annualized since 6/26/00)	7.05%	7.56%

Meta Platforms, Inc. (META) rose through the 50-day and 100-day moving averages after a strong second quarter print, posting revenue of $39.1B (23.3% YoY) vs. $38.3 expected and EPS of $5.16 vs. $4.72 expected. The company is guiding for third quarter revenue between $38.5B - $41.0B, up 18% YoY. The company remains focused on AI opportunities and raised their 2024 CAPEX outlook from $37.5B to $38.5B at the midpoint. UBS increased their price target from $630 to $635 (30% upside), and JP Morgan increased their price target from $480 to $610 (25% upside).

Alibaba Group Holding Ltd (BABA) rose through the 50-day moving average. The company announced a series of adjustments to its merchant operation policy. These changes align with the company’s 3-year turnaround plan with a focus on improving the quality of the platform’s services. Most analysts expect the changes to be accretive to both revenue and profitability. The company also announced their plans to debut a new artificial intelligence powered search tool. The company believes this tool will support their international commerce business expansion, helping businesses overcome language barriers and find products and suppliers more easily.

Everi Holdings Inc. (EVRI) continued to rise towards Apollo Global Management’s acquisition price of $14.25 per share, (9.8% upside from Friday’s close).

The strategy did not have any additional contributors last week. 

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 7/26/24 - 8/2/24

Name	Type	Net Return
Meta Platforms, Inc.	Equity	4.8%
Alibaba Group Holding Ltd	Equity	1.2%
Everi Holdings Inc.	Equity	1.2%

OneMain Holdings, Inc. (OMF) fell through the 50-day, 100-day, and 200-day moving averages following weak macro data releases throughout the week. The company reported 2Q results that beat expectations, delivering adjusted EPS of $1.02 vs. $0.90 expected. Net charge offs came in at 8.29% vs. 8.37% expected, down from the prior quarter’s reading of 8.59%, but up modestly from last year’s 7.60%. The company increased their quarterly dividend from $1.00 to $1.04 (9.3% yield) and reiterated their 2024 guidance of revenue growth between 6-8% and net charge offs between 7.7-8.3%. JP Morgan increased their price target from $54 to $56 (25% upside)

Citigroup Inc. (C) fell through the 50-day and 100-day moving averages on weakening macro news. Morgan Stanley increased their price target from $66 to $79 (41% upside).

Amazon.com, Inc. (AMZN) fell through the 200-day moving average. The company reported quarterly results which were roughly in line supported by a strong AWS report. The company reported revenue of $147.98B vs. $148.67B expected with EPS of $1.26 vs. $1.03 expected. The company guided for 3Q revenue of $156.25B at the midpoint vs. $158.28B expected. Additionally, the company hinted that CAPEX will be higher in 2H24. Goldman Sachs lowered their price target from $250 to $230, (37% upside), while JPM lowered their price target from $240 to $230. (37% upside).

IAC Inc. (IAC) fell through the 50-day, 100-day, and 200-day moving averages in sympathy with the broader market sell-off.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 7/26/24 - 8/2/24

Name	Type	Net Return
New Security*	Equity	-38.1%
OneMain Holdings, Inc.	Equity	-15.5%
Citigroup Inc.	Equity	-9.9%
Amazon.com, Inc.	Equity	-8.0%
IAC Inc.	Equity	-8.7%

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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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