Opportunity Equity Weekly Update for 10/4/2024 – 10/11/2024

Norwegian Jumps as Citi Gets Bullish While Dave and Buster’s Falls Despite Insider Buying

Last week, the Opportunity Equity Strategy’s representative account gained 2.21%, outperforming the S&P 500’s 1.13% rise. (Exhibit 1). The strategy ended the week up 19.89% YTD, 336 basis points behind the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 10/11/24¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (10/4 - 10/11)	2.21%	1.13%
MTD	2.68%	0.96%
QTD	2.68%	0.96%
YTD	19.89%	23.25%
1 Year	41.95%	34.80%
5 Year	11.36%	16.23%
10 Year	9.79%	13.87%
Inception (annualized since 6/26/00)	7.58%	7.89%

QXO, Inc. (QXO) rose through the 50-day moving average on limited news.

Norwegian Cruise Line Holdings Ltd. (NCLH) rose after Citi increased their price target from $20 to $30 (28% upside) and changed their rating from “neutral” to “buy”. They believe the company’s shift in strategy towards a better yield/cost spread could result in a three-year EPS compound annual growth rate (CAGR) of 30%.

Nvidia Corp (NVDA) rose after releasing their updated investor presentation. The presentation included a section on improved AI training, specifically the early stages of inference-time scaling law. Inference-time scaling law refers to the period of time it takes large language models (LLM) to “think” through the data before deducing the best response. Cantor believes the street is significantly underestimating the additional amount of computing power this will require.

Citigroup Inc. (C) rose in sympathy on JP Morgan’s better than expected earnings. Bank of America lowered their price target from $80 to $77 (17% upside).  

SoFi Technologies, Inc. (SOFI) rose on limited news.

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 10/4/24 - 10/11/24

Name	Type	Net Return
QXO, Inc.	Equity	11.5%
Norwegian Cruise Line Holdings Ltd.	Equity	14.7%
Nvidia Corp	Equity	7.9%
Citigroup Inc.	Equity	4.9%
SoFi Technologies, Inc.	Equity	7.4%

The Chief Executive Officer of Dave & Buster's Entertainment, Inc. (PLAY) purchased ~$500K of common stock.

UBS increased their price target on Alibaba Group Holding Ltd (BABA) from $112 to $140 (27% upside). They are forecasting revenue growth of (+6% YoY) in the Sep-24 quarter, with strong growth coming from the company’s international commerce segment (+30% YoY) and the company’s cloud computing segment (+10% YoY). UBS believes the gap between gross merchandise value (GMV) and customer management revenue (CMR) will continue to narrow as platform monetization improves.

UBS lowered their price target on Alphabet Inc. (GOOGL) from $204 to $187 (15% upside).

Stifel lowered their price target on Seadrill Limited (SDRL) from $70 to $65 (69% upside) but maintained their buy rating. They expect continued choppiness in the near-term with falling crude prices and management caution across the industry. However, Stifel views the stock as fundamentally undervalued, reiterating the strong free cash flow potential of the business once the company’s legacy lower priced contracts roll off. Additionally, the company recently renewed their $500M buyback plan (~19% of the current market cap). 

RBC Capital lowered their price target on OneMain Holdings, Inc. (OMF) from $60 to $58 (26% upside). They revised their net charge off (NCO) estimates upwards for Q3 but reiterated their FY24 and FY25 NCO estimates of 8.1-8.2% and 7.9%, respectively.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 10/4/24 - 10/11/24

Name	Type	Net Return
Dave & Buster's Entertainment, Inc.	Equity	-7.5%
Alibaba Group Holding Ltd	Equity	-3.8%
Alphabet Inc.	Equity	-2.3%
Seadrill Limited	Equity	-4.6%
OneMain Holdings, Inc.	Equity	-1.8%

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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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