Alibaba Rises on Strong Earnings while Norwegian Falls on Tax Concerns
Last week, the Opportunity Equity Strategy’s representative account fell -3.37%, underperforming the S&P 500’s -1.63% loss. (Exhibit 1). The strategy ended the week up 4.08% YTD, 166 basis points ahead of the S&P 500.Exhibit 1: Performance of Opportunity Equity Representative Account Net of Fees, Versus S&P 500, Through 2/21/251
| Time Period | Opportunity Equity Representative Account | S&P 500 |
| Last Week (2/14 - 2/21) | -3.37% | -1.63% |
| MTD | -0.70% | -0.35% |
| QTD | 4.08% | 2.42% |
| YTD | 4.08% | 2.42% |
| 1 Year | 28.62% | 22.35% |
| 5 Year | 9.63% | 14.27% |
| 10 Year | 8.64% | 13.06% |
| Inception (annualized since 6/26/00) | 7.88% | 7.93% |
Source: Bloomberg, Patient Capital Management.
Alibaba Group Holding Ltd (BABA) reached a new 52-week high after announcing strong earnings that beat on the top and bottom line. The company delivered revenue of $38.9B vs. $38.2B expected and EPS of $2.83 vs. $2.15 expected. The beat was primarily driven by improved monetization in Taobao and Tmall Group, the company’s ecommerce segment. Alibaba grew customer managed revenue (CMR) 9.4% y/y. Alibaba also grew their Cloud segment 13.1% y/y. Management believes cloud will continue to accelerate and plans to concentrate CAPEX on AI related infrastructure. During the quarter, Alibaba repurchased $1.3B shares, reducing their share count by ~1%. JP Morgan increased their price target from $125 to $170 (18% upside). JP Morgan believes the company’s improved monetization and cloud revenue outlook justify a higher multiple.
Morningstar maintained their $47 price target (41% upside) on Royalty Pharma plc (RPRX). They are confident in the company’s diversified portfolio and believe the market is significantly underestimating its long-term potential.
Cowen sees long term potential in Biogen Inc. (BIIB)’s Alzheimer’s Disease (AD) drug, Leqembi. Cowen flagged that Leqembi produced statistically significant phase 3 results which proved the drug is capable of slowing the rate of cognitive decline. Cowen expects Leqembi will capture 6% of the US AD market and do ~$3.4B in global sales by 2030. Using these expectations, Cowen’s discounted cashflow model suggests the stock is worth $200 (42% upside).
Canada Goose Holdings Inc. (GOOS) rose through the 50-day and 100-day moving averages on limited news.
Exhibit 2: Significant2 Contributors to Opportunity Equity Representative Account Performance, 2/14/25 - 2/21/25
| Name | Type | Net Return |
| Alibaba Group Holding Ltd | Equity | 15.2% |
| Royalty Pharma plc | Equity | 4.0% |
| New Security* | Derivative | 15.3% |
| Biogen Inc. | Equity | 2.4% |
| Canada Goose Holdings Inc. | Equity | 3.2% |
Source: Patient Capital Management. See below for additional information.
Coinbase Global, Inc. (COIN) fell through the 100-day and 200-day moving averages, following bitcoin lower. Last week, the SEC dropped their unregistered broker dealer lawsuit against Coinbase. JP Morgan thinks this was key to removing any regulatory concerns on the name. JP Morgan increased their price target from $264 to $344 (46% upside). They believe the stock has rallied on the back of increased cryptocurrency participation but see long-term potential through further development in tokenization and payments.
Meta Platforms, Inc. (META) fell on limited news.
Amazon.com, Inc. (AMZN) fell through the 50-day moving average on limited news. Truist reiterated their $265 price target (22% upside). Their latest credit card data suggests North America sales are ahead of consensus, inflecting from January’s deceleration m/m.
Bank of America increased their price target on Citigroup Inc. (C) from $95 to $100 (26% upside). Citi released their 10K and reiterated their plan to repurchase $1.5B shares in 1Q25 (~1% current market cap).
Norwegian Cruise Line Holdings Ltd. (NCLH) fell through the 50-day and 100-day moving averages after US Secretary of Commerce, Howard Lutnick, threatened to increase taxes on cruise companies in an interview. Deutsche Bank increased their price target from $24 to $28 (16% upside) as the company heads into the print.
Exhibit 3: Significant2 Detractors from Opportunity Equity Representative Account Performance, 2/14/25 - 2/21/25
| Name | Type | Net Return |
| Coinbase Global, Inc. | Equity | -14.2% |
| Meta Platforms, Inc. | Equity | -7.2% |
| Amazon.com, Inc. | Equity | -5.3% |
| Citigroup Inc. | Equity | -5.9% |
| Norwegian Cruise Line Holdings Ltd. | Equity | -8.6% |
Source: Patient Capital Management. See below for additional information.
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.
©2024 Patient Capital Management, LLC
Share