Peloton Rises on Cost Improvements while Energy Names Follow Crude Prices Lower
Last week, the Opportunity Equity Strategy’s representative account gained 3.66%, outperforming the S&P 500’s 1.47% rise. (Exhibit 1). The strategy ended the week up 14.02% YTD, 518 basis points behind the S&P 500.Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 8/23/241
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (8/16 - 8/23) | 3.66% | 1.47% |
| MTD | 0.42% | 2.15% |
| QTD | 3.44% | 3.39% |
| YTD | 14.02% | 19.20% |
| 1 Year | 32.01% | 28.91% |
| 5 Year | 11.41% | 16.50% |
| 10 Year | 8.13% | 13.04% |
| Inception (annualized since 6/26/00) | 7.40% | 7.78% |
Source: Bloomberg, Patient Capital Management.
QXO, Inc. (QXO) rose on limited news.
Peloton Interactive, Inc. (PTON) jumped through the 50-day, 100-day, and 200-day moving averages after delivering revenue of $643.6M vs. $630.1M expected and EBITDA of $70.3M vs. $53.2M expected. The company expanded gross margins to 44.7% (+1,170bps YoY) and continued to make progress on their restructuring plan, realizing $15M of cost savings in 4Q24. Management reiterated they are on track to realize $200M in annualized savings by FY25. The company also generated their second consecutive quarter of positive free cash flow and expects to generate $75M of FCF in FY25, easing balance sheet and liquidity concerns. The company laid out FY25 gross margin guidance of 49.0% vs. 46.5% expected and EBITDA guidance of $225M at the midpoint vs. $111M expected. JP Morgan lowered their price target from $7 to $5 (3% upside).
General Motors Co (GM) rose through the 50-day moving average. The company announced a strategic partnership between Uber and their autonomous vehicle unit, Cruise.
Expedia Group, Inc. (EXPE) rose through the 200-day moving average on limited news.
Norwegian Cruise Line Holdings Ltd. (NCLH) rose on limited news.
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 8/16/24 - 8/23/24
| Name | Type | Net Return |
| QXO, Inc. | Equity | 10.1% |
| Peloton Interactive, Inc. | Equity | 50.8% |
| General Motors Co | Equity | 7.2% |
| Expedia Group, Inc. | Equity | 5.4% |
| Norwegian Cruise Line Holdings Ltd. | Equity | 8.8% |
Source: Patient Capital Management. See below for additional information.
Seadrill Limited (SDRL), Energy Transfer LP (ET), and Kosmos Energy Ltd. (KOS) followed crude prices lower.
Green Thumb Industries Inc. (GTBIF) and PureTech Health plc (PRTC LN) both fell on limited news.
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 8/16/24 - 8/23/24
| Name | Type | Net Return |
| Green Thumb Industries Inc. | Equity | -5.0% |
| Seadrill Limited | Equity | -3.0% |
| Energy Transfer LP | Equity | -0.9% |
| Kosmos Energy Ltd. | Equity | -0.8% |
| PureTech Health plc | Equity | -0.1% |
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.
©2024 Patient Capital Management, LLC
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