Opportunity Equity Weekly Update for 2/7/2025 – 2/14/2025

Alibaba Rises on Strategic Partnership while Illumina Continues to Fall Following Earnings

Last week, the Opportunity Equity Strategy’s representative account gained 3.42%, outperforming the S&P 500’s 1.52% rise. (Exhibit 1). The strategy ended the week up 7.71% YTD, 360 basis points ahead of the S&P 500.

Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 2/14/25¹

Time Period	Opportunity Equity Representative Account	S&P 500
Last Week (2/7 - 2/14)	3.42%	1.52%
MTD	2.77%	1.29%
QTD	7.71%	4.11%
YTD	7.71%	4.11%
1 Year	35.03%	23.96%
5 Year	9.80%	14.36%
10 Year	9.20%	13.32%
Inception (annualized since 6/26/00)	8.04%	8.01%

Alibaba Group Holding Ltd (BABA) reached a new 52-week high, outperforming the Hang Seng’s +7.04% gain over the week. Alibaba shares jumped after the company announced a partnership with Apple to co-develop AI features for iPhones sold in China. Jefferies increased their price target from $144 to $150 (20% upside).

CVS Health Corp (CVS) rose through the 100-day and 200-day moving averages after announcing earnings that beat on the top and bottom line. The company delivered revenue of $97.7B vs. $97.2B expected and EPS of $1.30 vs. $0.53 expected. CVS laid out inline FY25 EPS guidance between $5.75 - $6.00 vs. $5.90 expected. Bank of America increased their price target from $63 to $75 (14% upside). They believe CVS can add $3-$4 to EPS if the company can get their Aetna business back to normalized margins. Bank of America highlighted that a 1% improvement in Aetna operating margins would drive an additional $800M in EBIT. 

IAC Inc. (IAC) rose through the 50-day moving average after announcing mixed earnings. The company generated revenue of $989M vs. $938M expected and EBIT of $50.6M versus $54.5M expected. The topline beat was driven by the company’s Dotdash Meredith (DDM) asset, delivering revenue of $522M (+10% y/y) vs. $485M expected (+2% y/y). The company reiterated their plan to spinoff their 85% stake in ANGI by March 31st. Truist lowered their price target from $80 to $76 (62% upside) and maintained their buy rating. They believe the Angi spinoff will improve profitability and strengthen the balance sheet for potential share buybacks and M&A. 

Crocs, Inc. (CROX) rose through the 50-day moving average after announcing earnings that beat on the top and bottom line. The company delivered revenue of $990M vs. $962M expected and adjusted EPS of $2.52 vs. $2.26 expected. The company’s EPS guidance beat street expectations, guiding between $12.70 - $13.15 vs. $12.58 expected. Crocs repurchased 2M shares in 4Q24 (4% current shares outstanding) for a total of 4.3M shares during the year (8% current shares outstanding). Bank of America is encouraged by management’s FY25 operating margin expectations as well as improving HeyDude sales trends. They think the stock looks cheap at ~8x next year’s earnings and increased their price target from $144 to $155 (41% upside).

Exhibit 2: Significant² Contributors to Opportunity Equity Representative Account Performance, 2/7/25 - 2/14/25

Name	Type	Net Return
Alibaba Group Holding Ltd	Equity	20.5%
CVS Health Corp	Equity	21.9%
IAC Inc.	Equity	13.0%
Crocs, Inc.	Equity	16.3%
New Security*	Derivative	21.2%

Illumina, Inc. (ILMN) continued to fall following the news that China placed the company on their unreliable entity list. Barclays downgraded the name from “equal-weight” to “underweight” and lowered their price target from $130 to $100 (0% downside). They expect Illumina to grow in the mid-single digits and therefore believe it should trade at a bigger discount to their peer group.

United Airlines Holdings, Inc. (UAL) fell on limited news.

DNB Markets lowered their price target on Seadrill Limited (SDRL) from $49 to $45 (45% upside) and maintained their “buy” rating. Sculptor Capital Management exited the name per their latest 13F filing.

Zacks lowered their price target on Dave & Buster's Entertainment, Inc. (PLAY) from $31 to $22 (-10% downside) and downgraded the name from “neutral” to “underperform”.

Exhibit 3: Significant² Detractors from Opportunity Equity Representative Account Performance, 2/7/25 - 2/14/25

Name	Type	Net Return
New Security*	Derivative	-23.7%
Illumina, Inc.	Equity	-9.7%
United Airlines Holdings, Inc.	Equity	-4.3%
Seadrill Limited	Equity	-5.3%
Dave & Buster's Entertainment, Inc.	Equity	-5.1%

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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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