Opportunity Equity Weekly Update for 9/20/2024 – 9/27/2024

Alibaba Rises on China’s Stimulus Package while Energy Names Follow Crude Prices Lower

Last week, the Opportunity Equity Strategy’s representative account gained 2.31%, outperforming the S&P 500’s 0.64%% rise. (Exhibit 1). The strategy ended the week up 17.36% YTD, 419 basis points behind the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 9/27/24¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (9/20 - 9/27)	2.31%	0.64%
MTD	3.74%	1.70%
QTD	6.47%	5.43%
YTD	17.36%	21.55%
1 Year	40.49%	36.22%
5 Year	11.10%	16.00%
10 Year	8.76%	13.27%
Inception (annualized since 6/26/00)	7.50%	7.84%

Alibaba Group Holding Ltd (BABA) broke out to a new 52-week high after China’s central bank announced a package of stimulus policies to help revive the country’s economy. The package includes a 20bps cut to the benchmark interest rate and 50bps cut to the reserve requirement ratio for banks. Governor Pan Gongsheng said the central bank also intends to inject liquidity into the market, offering funds to both companies and institutional investors. 

Canada Goose Holdings Inc. (GOOS) rose through the 50-day, 100-day, and 200-day moving averages following China’s stimulus package announcement.

United Airlines Holdings, Inc. (UAL) and Delta Air Lines, Inc. (DAL) both jumped on Thursday after Southwest Airlines announced increased Q3 revenue guidance and cheaper than expected Q3 fuel costs.

QXO, Inc. (QXO) rose on limited news.

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 9/20/24 - 9/27/24

Name	Type	Net Return
Alibaba Group Holding Ltd	Equity	21.6%
Canada Goose Holdings Inc.	Equity	20.6%
United Airlines Holdings, Inc.	Equity	11.2%
Delta Air Lines, Inc.	Equity	9.8%
QXO, Inc.	Equity	4.3%

Bernstein and Morgan Stanley both downgraded their ratings on General Motors Co (GM) after Mercedes cut their FY24 guidance the week prior on the back of weaker demand from China. Bernstein lowered their price target from $54.50 to $53 (14% upside) and downgraded the name from outperform to market perform. Morgan Stanley lowered their price target from $47 to $42 (10% downside), and downgraded the name from equal weight to underweight

OneMain Holdings, Inc. (OMF) fell through the 50-day, 100-day, and 200-day moving averages. Cowen reported that OneMain’s personal loan mail volume for August was no longer leading the industry but is still up +24% y/y compared to the industry’s +5% y/y mail volume growth.

Mizuho initiated coverage on Kosmos Energy Ltd. (KOS) with a neutral rating and $5 price target (26% upside), writing that capital expenditures are slowing, and the company is nearing a free cash flow inflection point. Bank of America lowered their price target from $8.15 to $7.00 (77% upside) but maintained their buy rating. 

Moffettnathanson lowered their price target for Amazon.com, Inc. (AMZN) from $230 to $228, (21% upside), but maintained their buy rating.

Seadrill Limited (SDRL) followed Brent’s -3.4% move lower over the week.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 9/20/24 - 9/27/24

Name	Type	Net Return
General Motors Co	Equity	-4.9%
OneMain Holdings, Inc.	Equity	-4.6%
Kosmos Energy Ltd.	Equity	-7.0%
Amazon.com, Inc.	Equity	-1.9%
Seadrill Limited	Equity	-3.3%

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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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