Opportunity Equity Weekly Update for 10/25/2024 – 11/1/2024

Amazon Rises on Improved Margins While Crocs Falls on HeyDude Woes

Last week, the Opportunity Equity Strategy’s representative account gained 0.40%, outperforming the S&P 500’s -1.35% loss. (Exhibit 1). The strategy ended the week up 21.29% YTD, 18 basis points behind the S&P 500.

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

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (10/25 - 11/01)	0.40%	-1.35%
MTD	0.57%	0.41%
QTD	3.88%	-0.50%
YTD	21.29%	21.47%
1 Year	55.70%	37.15%
5 Year	9.61%	15.14%
10 Year	8.66%	13.05%
Inception (annualized since 6/26/00)	7.61%	7.80%

Amazon.com, Inc. (AMZN) beat on the top and bottom line, delivering revenue of $158.9B vs. $157.3B expected and EPS of $1.43 vs. $1.14 expected. The company also delivered $17.4B in operating income (+53% YoY) vs. $14.7B expected. The AWS segment continued to grow in line with expectations (+19% YoY) but pushed margins to 38% vs. 33% expected. The company laid out fourth quarter revenue guidance of $185B at the midpoint (+9% y/y) and operating income guidance of $18B at the midpoint (+33% y/y). JMP increased their price target from $265 to $285 (44% upside).

United Airlines Holdings, Inc. (UAL) and Delta Air Lines Inc. (DAL) both reached new 52-week highs during the week. Bernstein increased their price target on United from $85 to $105 (30% upside) while they increased their price target on Delta from $65 to $76 (29% upside).  

Peloton Interactive, Inc. (PTON) reached a new 52-week high on Thursday after announcing better than expected revenue and EBITDA. The company appointed Peter Stern as their new CEO. Peter is currently the president of Ford Integrated Services, and previously held senior positions at Apple and Time Warner Cable. Peloton raised their FY25 EBITDA guidance to $265M at the midpoint. Canaccord Genuity increased their price target from $5 to $10 (38% upside).

Norwegian Cruise Line Holdings Ltd. (NCLH) reached a new 52-week high on Thursday after printing inline revenue of $2.8B and EPS of $0.95 (+34% y/y) vs. $0.91 expected. Net yields grew 9% y/y vs 6.4% expected. This was attributed to a stronger than expected consumer and increased demand for Alaska and Canon New England Voyages. Management increased their annual net yield guidance by 120bps to 9.4% vs the street’s 8.5%. The company also increased FY24 EBITDA guidance from $2.3B to $2.4B (+29% y/y) and net income guidance from $790M to $855M (+404% y/y). Stifel increased their price target from $29 to $32 (29% upside).

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 10/25/24 - 11/1/24

Name	Type	Net Return
Amazon.com, Inc.	Equity	5.4%
United Airlines Holdings, Inc.	Equity	7.8%
Peloton Interactive, Inc.	Equity	15.4%
Norwegian Cruise Line Holdings Ltd.	Equity	7.6%
Delta Air Lines, Inc.	Equity	7.9%

Crocs, Inc. (CROX) fell through the 200-day moving average despite printing inline revenue of $1B and better than expected adjusted EPS of $3.60 vs. $3.10 expected. The Crocs brand grew 7.9% y/y vs. 5.5% expected, but HeyDude slid -17.4% y/y vs. -14.7% expected. Management revised their FY24 revenue guidance downwards from +3-5% y/y to +3%. Loop Capital lowered their price target from $155 to $150 (41% upside) but maintained their buy rating. They believe the valuation looks attractive following the recent pullback.

Kosmos Energy Ltd. (KOS) reached a new 52-week low, following brent’s -3.88% move lower.

Coinbase Global, Inc. (COIN) fell through the 100-day and 200-day moving average after posting inline revenue and EPS of $0.28 vs. $0.45 expected. Management announced a $1B buyback program (~2% of current market cap). Needham increased their price target from $260 to $290 (59% upside). Roughly 90% of the company’s revenue comes from transaction activity. As crypto’s regulatory environment continues to ease, Needham believes the company will be a large beneficiary of increased institutional trading.

Nvidia Corp (NVDA) fell on limited news.

IAC Inc. (IAC) fell through the 100-day moving average. Cowen increased their price target from $78 to $82 (67% upside). Cowen is forecasting FY25 revenue of $3.69B vs. $3.80B expected and FY25 EBITDA of $448.M vs. $456.6M expected.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 10/25/24 - 11/1/24

Name	Type	Net Return
Crocs, Inc.	Equity	-20.6%
Kosmos Energy Ltd.	Equity	-11.6%
Coinbase Global, Inc.	Equity	-9.3%
Nvidia Corp	Equity	-4.3%
IAC Inc.	Equity	-4.3%

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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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