Opportunity Equity Weekly Update for 12/6/2024 – 12/13/2024

Alphabet Jumps on Quantum Computing Advancements while Dave & Busters Falls on Earnings Miss

Last week, the Opportunity Equity Strategy’s representative account fell -3.69%, underperforming the S&P 500’s -0.61% fall. (Exhibit 1). The strategy ended the week up 28.42% YTD, 13 basis points behind the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 12/13/24¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (12/6 - 12/13)	-3.69%	-0.61%
MTD	-2.91%	0.37%
QTD	9.99%	5.30%
YTD	28.42%	28.55%
1 Year	36.05%	30.36%
5 Year	9.21%	15.63%
10 Year	9.53%	13.74%
Inception (annualized since 6/26/00)	7.83%	8.01%

Alphabet Inc. (GOOGL) reached an all-time high after unveiling their new quantum chip, Willow. This marked a significant computing milestone. Bank of America believes Willow could drastically improve Alphabet’s ability to train large language models and potentially create a long-term moat for the company.

Goldman Sachs lowered their price target on Canada Goose Holdings Inc. (GOOS) from $9.00 to $8.00 (-19% downside) and maintained their sell rating.

Bank of America downgraded SoFi Technologies, Inc. (SOFI) from “neutral” to “underperform” and maintained their $12 price target (-26% downside). They acknowledged the company’s solid execution year-to-date but believe valuation has exceeded fundamentals following the stock’s latest run.

RBC lowered their price target on Illumina, Inc. (ILMN) from $254 to $252 (75% upside) but maintained their buy rating. They reiterated Illumina as one of their best ideas, highlighting the company currently trades at a 42% discount to its historic forward four quarter price to earnings ratio.

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 12/6/24 - 12/13/24

Name	Type	Net Return
Alphabet Inc.	Equity	8.8%
Canada Goose Holdings Inc.	Equity	4.3%
SoFi Technologies, Inc.	Equity	1.5%
Illumina, Inc.	Equity	2.0%
Crocs, Inc.	Equity	1.8%

Dave & Buster's Entertainment, Inc. (PLAY) fell through the 50-day and 100-day moving averages after reporting an earnings miss and announcing the resignation of their CEO. The company posted revenue of $453M vs. $463M expected and EBITDA of $68M vs. $76M expected. Management offered FY 24 EBITDA guidance of $510M at the midpoint vs. $526M expected. The company repurchased an additional $28M shares during the quarter, retiring 2M shares year-to-date (~5.2% current shares outstanding). Loop Capital lowered their price target from $59 to $45 (64% upside) but maintained their buy rating.

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

Kosmos Energy Ltd. (KOS) fell to a new 52-week low on news the company was in preliminary discussions to potentially acquire Tullow Oil. Goldman Sachs lowered their price target from $7.50 to $6.00 (99% upside) but maintained their buy rating. They believe Kosmos is nearing a free cash flow (FCF) inflection point and expect the company to generate $379M in FCF (30% yield) during 2025 and $559M in FCF (44% yield) during 2026.

CVS Health Corp (CVS) fell to a new 52-week low on the back of two negative headlines. Senators proposed a bill to break up healthcare conglomerates that own both pharmacy-benefit managers (PBMs) and a drug dispensing pharmacy business. If the bill passes, CVS would be required to divest their pharmacy business within the next three years. Additionally, Jim Jordan, Chairman of the House Judiciary Committee, requested documents from CVS pertaining to the company’s pharmaceutical hub business.

Alesia Haas, the CFO of Coinbase Global, Inc. (COIN), presented at Goldman Sach’s Financial Services Conference. Management views the favorable regulatory environment as an opportunity for growth and plans to take marketing expenses to the high end of their guidance. The company welcomes competitors to the space and believes new entrants, especially traditional custodians, will be reliant on their expertise in managing crypto assets. Coinbase currently custodies 17 of the 20 bitcoin ETFs and continues to invest broadly across the crypto economy. Needham raised their price target from $375 to $420 (35% upside).

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 11/29/24 - 12/6/24

Name	Type	Net Return
Dave & Buster's Entertainment, Inc.	Equity	-25.4%
QXO, Inc.	Equity	-7.2%
Kosmos Energy Ltd.	Equity	-13.0%
CVS Health Corp	Equity	-10.7%
Coinbase Global, Inc.	Equity	-9.6%

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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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