Opportunity Equity Weekly Update for 11/1/2024 – 11/8/2024

Coinbase Jumps in Sympathy with Bitcoin While Green Thumb Falls on Election Concerns

Last week, the Opportunity Equity Strategy’s representative account gained 6.59%, outperforming the S&P 500’s 4.69% gain. (Exhibit 1). The strategy ended the week up 29.29% YTD, 212 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 11/8/24¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (10/25 - 11/01)	6.59%	4.69%
MTD	7.20%	5.12%
QTD	10.73%	4.17%
YTD	29.29%	27.17%
1 Year	57.01%	38.80%
5 Year	10.85%	15.99%
10 Year	9.47%	13.48%
Inception (annualized since 6/26/00)	7.89%	8.00%

Coinbase Global, Inc. (COIN) rose through the 100- and 200-day moving averages, outperforming Bitcoin’s 10.60% move higher throughout the week. The company is expected to benefit from an easing regulatory landscape following the election.

SoFi Technologies, Inc. (SOFI) and Citigroup (C), also beneficiaries of election results, both jumped to 52-week highs as both companies are expected to benefit from reduced regulatory pressures and capital requirements.

Expedia Group, Inc. (EXPE) reached a new 52-week high on Friday after posting roughly in line revenue of $4.1B and a slight adj EPS beat of $6.13 vs. $6.10 expected. Nights growth came in at 9% y/y vs. 8% y/y expected and VRBO inflected, delivering a full quarter of growth after 6 consecutive quarters of decline. The company reiterated their targeted full year revenue growth of +6% y/y. They continued to repurchase stock, bringing their year-to-date total to ~12M shares (~10% of shares outstanding) with $3.2B remaining on the program (14% of the current market cap). Evercore increased their price target from $175 to $210 (16% upside). 

Peloton Interactive, Inc. (PTON) reached a new 52-week high last week after reporting better than expected earnings the week prior. Bank of America increased their price target from $3.75 to $9.00 (1% upside). Bank of America believes the company can cut ~$100M in operating expenses, leading to double digit EBITDA growth from here. They are optimistic on Peloton’s newly appointed CEO, Peter Stern. They believe he can reinvigorate subscriber growth which would drive substantial earnings upside potential. 

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 11/1/24 - 11/8/24

Name	Type	Net Return
Coinbase Global, Inc.	Equity	48.0%
SoFi Technologies, Inc.	Equity	17.8%
Expedia Group, Inc.	Equity	13.4%
Citigroup Inc.	Equity	8.7%
Peloton Interactive, Inc.	Equity	22.8%

Green Thumb Industries Inc. (GTBIF) reached a new 52-week low on Friday despite posting revenue of $286.9M vs. $283.1M expected and a slight EBITDA miss of 89.2M vs 89.7M expected. Morningstar reiterated their $24 price target (169% upside). They reported the federal efforts to reschedule cannabis from a Class 1 to Class 3 drug continue, and do not believe the election warrants a change to their estimate of fair valuation.

S4 Capital plc (SFOR LN) reached a new 52-week low after announcing an earnings forecast cut. Citi lowered their price target from 230GBp to 200GBp (500% upside)

Royalty Pharma plc (RPRX) fell despite printing revenue of $735M vs. $730M expected, EBIT of $679M vs. $553M expected, and adj EPS of $0.92 vs. $0.93 expected. The company repurchased $95M in shares during the quarter, bringing their year-to-date total to $180M (~1% of the current market cap) with $515M left on the program (~3% of the current market cap). Morningstar reiterated their price target of $47 (79% upside). They are confident in the company’s diversified portfolio and believe the stock remains deeply undervalued. 

Alibaba Group Holding Ltd (BABA) fell through the 50-day moving average on renewed concerns for geopolitical tensions following US election results.

Loop Capital lowered their price target on Crocs, Inc. (CROX) from $150 to $110 (9% upside), and downgraded the name to a hold. They are concerned with the recent slide in HeyDude sales and do not think there will be a reversal.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 11/1/24 - 11/8/24

Name	Type	Net Return
Green Thumb Industries Inc.	Equity	-13.3%
S4 Capital plc	Equity	-14.0%
Royalty Pharma plc	Equity	-3.3%
Alibaba Group Holding Ltd	Equity	-3.5%
Crocs, Inc.	Equity	-4.6%

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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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