Opportunity Equity Weekly Update for 1/24/2025 – 1/31/2025

Alibaba Rises on Latest AI Model while Nvidia Falls on DeepSeek Concerns

Last week, the Opportunity Equity Strategy’s representative account fell -1.20%, underperforming the S&P 500’s -0.99% loss. (Exhibit 1). The strategy ended the week up 4.81% YTD, 203 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 1/31/25¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (1/24 - 1/31)	-1.20%	-0.99%
MTD	4.81%	2.78%
QTD	4.81%	2.78%
YTD	4.81%	2.78%
1 Year	34.20%	26.38%
5 Year	10.42%	15.17%
10 Year	9.85%	13.76%
Inception (annualized since 6/26/00)	7.93%	7.97%

Alibaba Group Holding Ltd (BABA) moved through the 100-day moving average. The company released their latest vision-language model, Owen2.5-VL, which is capable of running 1 million input tokens at once.

Norwegian Cruise Line Holdings Ltd. (NCLH) rose through the 50-day moving average on the back of Royal Caribbean’s strong earnings beat.

Meta Platforms, Inc. (META) reached a new 52-week high after announcing earnings that beat on the top and bottom line. The company delivered revenue of $48B (+21% y/y) vs. $47B expected and EPS of $8.02 (+51% y/y) vs. $7.51 expected. Meta remains devoted to improving their AI developments and laid out FY25 CAPEX guidance between $60-$65B (+67% y/y at the midpoint). Mark Zuckerberg said he believes more than 1B people will be using a personalized AI assistant by the end of 2025 and expects Meta to have the most popular one. Canaccord raised their price target from $730 to $825 (20% upside).

CVS Health Corp (CVS) rose through the 100-day moving average. Evercore raised their price target from $60 to $65 (15% upside) on revised 2026 Medicare Advantage rate expectations. They believe 2026 will be a major inflection point for CVS and acknowledged potential for additional upside beyond their revised numbers.

Needham increased their price target on Alphabet Inc. (GOOGL) from $210 to $225 (10% upside) ahead of the print. They are bullish on Cloud growth trends and revised their Google Cloud 4Q24 operating income estimate to $2B (+131% y/y). Needham views Alphabet as a long-term play. They like the company’s positions in digital advertising, the streaming business (via YouTube), and GenAI race. On regulatory concerns, Needham is unphased, believing the company is worth more broken into pieces versus where the conglomerate trades today.

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 1/24/25 - 1/31/25

Name	Type	Net Return
Alibaba Group Holding	Equity	10.9%
Norwegian Cruise Line Holdings Ltd.	Equity	10.4%
Meta Platforms, Inc.	Equity	6.4%
CVS Health Corp	Equity	3.5%
Alphabet Inc.	Equity	1.9%

Nvidia Corp (NVDA) fell through the 50-day, 100-day, and 200-day moving averages after China released a competitive large language model without the use of Nvidia’s best chips. Citi does not expect US companies to switch from using Nvidia’s best in class chips and reiterated their $175 price target (46% upside).

SoFi Technologies, Inc. (SOFI) fell despite announcing strong earnings. The company delivered revenue of $739M (+19% y/y) vs. $679M expected and EPS of $0.29 vs. $0.04 expected, marking the company’s first year of GAAP profitability. The company laid out FY25 guidance ahead of consensus, with revenue between $3.2B - $3.275B (23-26% y/y) vs. $3.0B expected and EPS of $0.55 - $0.80 vs. $0.49 expected. The company’s 1Q25 guidance was mixed, with revenue coming in above consensus at $735M vs. $683M expected and EPS below consensus at $0.03 vs. $0.05 expected. Sofi cited a tax expense as the reason for 1Q25 EPS guidance coming in below consensus. Needham believes this is a short-term blip and increased their price target from $13 to $20 (27% upside).

General Motors Co (GM) fell through the 50-day and 100-day moving averages despite beating on both the top and bottom line. The company generated revenue of $47.7B vs. $44.5B expected and adjusted EPS of $1.92 vs. $1.83 expected. General Motors laid out strong FY25 guidance, expecting EBIT between $13.7B - $15.7B and adjusted EPS between $11 - $12. The company repurchased an additional 25M shares during the quarter (~2.5% current shares outstanding), bringing their annual total to 87M shares (~9% current shares outstanding).

Kosmos Energy Ltd. (KOS) followed Brent’s -2.22% move lower.

QXO, Inc. (QXO) continued to fall on a rejected takeover bid for Beacon roofing. QXO originally offered to purchase Beacon for $124.25 per share on January 15th, a 14% premium over the previous day’s close. Beacon immediately rejected the offer, believing it undervalued the company. The following week, Beacon was said to be exploring rival takeover bids. Last week, QXO announced they were going hostile and launched an $11B tender offer to acquire all of Beacon’s outstanding shares.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 1/17/25 - 1/24/25

Name	Type	Net Return
Nvidia Corp (NVDA)	Equity	-15.8%
SoFi Technologies, Inc. (SOFI)	Equity	-11.9%
General Motors Co (GM)	Equity	-8.3%
Kosmos Energy Ltd. (KOS)	Equity	-7.3%
QXO, Inc.	Equity	-3.2%

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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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