During the fourth quarter of 2024, the Patient Opportunity Equity Strategy generated a total return of 8.2% net of fees. In comparison, the portfolio’s unmanaged benchmark, the S&P 500 Index, returned 2.4%.
Using a three-factor performance attribution model, allocation and selection effects contributed to the portfolio’s outperformance, which were partially offset by interaction effects. Sofi Technologies Inc. (SOFI), United Airlines Holdings Inc. (UAL), Peloton Interactive Inc. (PTON), Energy Transfer LP (ET), and Amazon.com Inc. (AMZN) were the largest contributors to performance, while CVS Health Corp. (CVS), IAC Inc. (IAC), Crocs Inc. (CROX), Biogen Inc. (BIIB), and Alibaba Group Holdings Inc. (BABA) were the largest detractors.
Relative to the index, the portfolio was overweight the Consumer Discretionary, Communication Services, Financials, Energy, and Health Care sectors on average during the quarter. With zero allocation to Real Estate, Utilities, Materials, and Consumer Staples, the portfolio was underweight these sectors along with the Information Technology, and Industrials sectors.
The portfolio added three positions: Precigen Convertible Preferreds, Precigen Warrants, and Fidelity Wise Origin Bitcoin Fund (FBTC) and eliminated four positions: Fiserv Inc. (FI), PureTech Health plc (PRTC LN), Travel & Leisure (TNL), and Western Alliance Bancorporation (WAL), during the quarter. The portfolio ended the quarter with 37 holdings where the top 10 stocks represented 48.6% of total assets compared to 37.3% for the index, highlighting the portfolio’s meaningful active share of 94.2%.
Portfolio Review
While history doesn’t repeat itself, it often rhymes. The fourth quarter of 2024 looked much like the fourth quarter of 2023 and for similar reasons. 2023 benefited from a renewed belief in a soft-landing, as did 2024 which was sparked by the election of Donald Trump as the next President and a belief that would bring growth-oriented policies and lower regulation.
The top performers in the fourth quarter were once again Financials and Travel names. We’ve been over-indexed to them since the pandemic, which has served us well. We strategically added to certain financial names like Sofi Technologies (SOFI) and Coinbase Global Inc. (COIN) during the year. Both companies rebounded strongly in the fourth quarter. We believe Coinbase is building the platform for the crypto ecosystem. Certain recent advances (wallet, base improvements, USD Coin) could cause an adoption tipping point. We like that Coinbase continues to widen its moat by persistently investing in innovation.
We’ve owned Sofi since its de-SPAC in 2020. The company is early in its life cycle with a very large total addressable market (TAM). As with most early-stage companies, the stock can be volatile, and we aim to monetize that volatility. We added to the stock in the $6s as we believed the combination of a proven management team, strong fundamentals, lower interest rates and reaching profitability weren’t appropriately discounted. The stock advanced more than 180% from the lows into year-end highs as the company beat expectations and announced its Lending Platform business (fee-for-service with no credit risk).
Despite years of strong fundamentals from our travel names, 2024 seemed to be the year that other investors started to believe in travel strength durability. Demand for travel has continued to be strong despite concerns around consumer health. According to IATA (International Air Transport Association) global air passenger travel is still below the pre-COVID implied trend path despite reaching a new all time-high this year.
As reversion to the mean continues, we believe our high-quality names like Delta Air Lines (DAL), United Airlines Holdings (UAL), Expedia Group Inc. (EXPE), and Norwegian Cruise Line (NCLH) will continue to benefit.
Finally, we took the opportunity to reinvest some of our winnings into laggards particularly in the healthcare and energy space. Names like Biogen Inc. (BIIB), and CVS Health Corp. (CVS) traded at decade low prices creating attractive opportunities to add exposure while high-quality companies like Royalty Pharma (RPRX) traded roughly sideways allowing us to add exposure to a more defensive name.
New and Eliminated
This quarter we entered three new positions, while exiting four positions. We participated in a PIPE (private investment in public entity) deal with Precigen Inc. (PGEN) at the end of the fourth quarter resulting in new positions in a perpetual convertible preferred as well as warrants. Precigen is an early-stage biopharmaceutical company focused on next generation cell and gene therapies. The company’s PRGN-2012 program in recurrent respiratory papillomatosis (RRP) has the potential to be the first-in-class “off-the-shelf” immunotherapy in a patient population with limited options. The company submitted their biologics license application (BLA) for PRGN-2012 on December 30th with a request for a priority review setting the clock for a decision by mid-2025. The additional capital raise is expected to fund the company’s operations well into 2026 and help fund the launch of this all-important drug in an orphan designation. The company is run by Dr. Helen Sabzevari, who has extensive expertise in research and development of immunotherapy-based therapeutics, having founded and served as Chief Scientific Officer of Compass Therapeutics. She has driven amazing clinical progress at PGEN over the past few years and we believe that PRGN-2012 is well positioned to be a best-in-class therapeutic for RRP.
In the quarter we entered a position in Bitcoin via the Fidelity Wise Origin Bitcoin Fund (FBTC). We see Bitcoin as an attractive diversifier to the portfolio. We continue to be optimistic over the long-term. As Bitcoin becomes more easily accessible, demand should increase, while the supply of Bitcoin will continue to be limited at 21M. We continue to think of Bitcoin as digital gold with a materially lower market cap of $1.9T vs $17.9T for Gold.
We exited PureTech Health PLC (PRTC LN), Fiserv Inc. (FI), Travel & Leisure (TNL), and Western Alliance Bancorporation (WAL) in the quarter to redeploy investments into new ideas.
Top Contributors and Top Detractors
Top Contributors | Ticker | Net Contribution (bps) |
Sofi Technologies Inc. | SOFI | 225 |
United Airline Holdings Inc. | UAL | 194 |
Peloton Interactive Inc. | PTON | 109 |
Energy Transfer LP | ET | 107 |
Amazon.com Inc. | AMZN | 106 |
Top Detractors | Ticker | Net Contribution (bps) |
CVS Health Corp. | CVS | -94 |
IAC Inc. | IAC | -91 |
Crocs Inc. | CROX | -70 |
Biogen Inc. | BIIB | -68 |
Alibaba Group Holdings Ltd | BABA | -66 |
*Contribution illustrated above are provided net of fees and includes cash.
Top Contributors
Sofi Technologies Inc. (SOFI) was a standout in the quarter, climbing 95% and up 156% from the intra-day lows in June. The company benefited from Fed rate cuts and the market’s growing optimism that the economy will avoid a recession. The company continues to grow its customer count while successfully cross selling into their loans and financial service products. In the quarter, we saw the company take on a new revenue stream by originating loans for third parties, creating an attractive balance sheet-light revenue source, helping improve return on equity and margins. Sofi is early in its life cycle, currently being a small player in a very large total addressable market (TAM). With their strong management team, we believe the company will continue to deliver on their guidance of strong growth and expanding margins.
United Airlines Holdings (UAL) had a strong fourth quarter, gaining 70.2% in the period. The company benefitted from continued strong demand that surprised the market as well as the initiation of a buyback program, the first since COVID. There continues to be strong travel demand from both retail and business travelers. According to the International Air Transport Association (IATA), global air passenger travel is still below the pre-COVID implied trend path despite reaching a new all-time high this year. United’s focus on the customer over the last few years has led to strong improvement in net promoter scores (NPS) which should continue to flow through the model via better TRASM (total revenue per available seat mile) and higher cash flows and earnings. As of today, United alone accounts for ~30% of the overall industry’s profits. We expect this market share to grow and be defensible as we transition to an environment where customer service becomes the differentiating factor, and scale provides unparalleled ability to reinvest in the customer experience.
Peloton Interactive Inc. (PTON) took off in the fourth quarter, climbing 85.8% and up 202.1% from the lows in August. Peloton is the posterchild of a pandemic beneficiary taking advantage of lockdowns to sell people exercise equipment they could use at home. The normalization process from this heightened level of demand has pressured the stock for the last few years. However, in 2024 the company made a material pivot from a growth focus to a margin and cash flow focus. With this renewed focus on managing profitability the company successfully moved EBITDA into positive territory, improved their inventory position, and successfully refinanced their debt. The company also announced a new CEO in October, the third one in as many years, bringing a new set of eyes to reinvigorate the company. We continue to believe the value of the business lives in the high-margin, sticky subscription piece of the business.
Top Detractors
CVS Health Corp. (CVS) struggled throughout the year following a number of disappointments related to their Medicare Advantage business. While this had a negative impact on the near-term financials, the issues are well understood, and changes are already being made for the 2025 program. We see a clear pathway to improving margins throughout 2025 in all areas of the business. Furthermore, the company has upgraded their management team promoting David Joyner to CEO and hiring former UnitedHealth Group executive Steven Nelson to run the managed care business. On a longer-term basis, we continue to think CVS has an attractive combination of assets owning a healthcare benefits business (Aetna), a pharmacy-benefits manager (Caremark), an in-home evaluation business (Signify Health) and in-home primary care business (Oak Street Health) supporting the industry transition to a value-based care model. As the company works to implement the turnaround, the company has an attractive dividend yield of 5.8%.
IAC Inc. (IAC) declined in the fourth quarter following the announcement that the company is considering spinning out its remaining ownership of Angi Inc. (ANGI) to shareholders. The company is focused on slimming down IAC and building cash in order to take advantage of attractive M&A opportunities. This is a strategy the company has employed for years and one which has created a lot of shareholder value. The company trades at an extremely attractive valuation as the company’s publicly traded ownership stakes in Angi Inc. (ANGI) and MGM Resorts International (MGM) and its corporate cash balance alone account for 107% of the current market cap. This means there is no value currently being attributed to their private holdings Meredith, Vivian Health, Care.com, and Turo. Many of the private assets are household names. While conglomerates do not always receive the valuation credit they deserve, IAC has a history of spinning-out assets and capturing value for their shareholders. We have no doubt that will continue to be the case.
Crocs Inc. (CROX) declined in the quarter following another Heydudes disappointment with implied growth for 4Q below expectations. The company has been attempting to turn around the Heydudes brand which it purchased in 2022 but has been suffering from market saturation and still limited brand awareness. In April, the company announced the appointment of Terence Reilly as EVP and President of Heydudes. Terence is best known for his time at Stanley where he reshaped the insulated drinkware brand into a current cultural item. The company is hoping he can bring some of this magic to the Heydudes brand. Despite the Heydudes disappointment, the core brand continues to deliver, growing in the high-single-digits with margin expansion. Overall, we view the child piece of the core Crocs product as a consumer staple and believe people are underappreciating its durability. The company continues to repurchase its stock with an outstanding buyback program representing 8.5% of shares outstanding.

Market Proxy is S&P 500. Returns greater than 1 year are annualized. Source: Bloomberg and Patient Capital Management
The data provided is from APX and Patient Capital Management, LLC and is believed to be reliable, but is not guaranteed as to its timeliness or accuracy. Percentages and returns may not sum to 100% due to rounding effects. A three-factor attribution consists of the allocation effect, selection effect, and the interaction effect, which sum to the portfolio's performance relative to the benchmark.
• Allocation. The allocation effect represents the portion of the portfolio's excess return attributable to differences in sector weights between the portfolio and the benchmark index.
• Selection. The selection effect represents the portion of the portfolio's excess return attributable to differences in the weights of individual securities within each sector between the portfolio and the benchmark index.
• Interaction. Most complex and sometimes counterintuitive, the interaction effect represents the portion of the portfolio’s excess return attributable to combining sector allocation decisions with security selection decisions, and is often thought of as measuring the accuracy of manager’s convictions.
Please note that the methodology used by our independent third-party attribution software vendor will at times present sector allocation effects that are counterintuitive. For example, the software may calculate a negative sector effect even when the portfolio, on a weighted average basis for the period, was overweight an outperforming sector. Under the vendor's methodology, allocation effects in recent months may overwhelm the allocation effects from earlier in the period, particularly over longer time frames.
Returns illustrated above are provided net of fees and include cash. Total portfolio return figures provided above reflect the sum of the returns of the holdings in the representative account portfolio due to price movements and dividend payments or other sources of income.
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The S&P 500 Index is a market capitalization-weighted index of 500 widely held common stocks. Investors cannot invest directly in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. Free cash flow (FCF) is the cash a company generates after taking into consideration cash outflows that support its operations and maintain its capital assets. CAPEX (Capital expenditures) are monies used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.
Earnings growth is not representative of the Fund’s future performance.
This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities and sectors listed. All investments are subject to risk, including the possible loss of principal. There is no guarantee investment objectives will be met. Neither Patient Capital Management, LLC, nor its information providers are responsible for any damages or losses arising from any use of this information.
The Opportunity Equity composite performance figures reflected above include the deduction of a model investment management fee of 1% (the highest fee for separate accounts under our fee schedule), paid quarterly and certain other expenses. For important information about Opportunity Equity Strategy performance, please click on the Opportunity Equity Strategy Composite Performance Disclosure. Past performance is no guarantee of future results.
All holdings and portfolio data are reflective of a representative Opportunity Equity account.
Performance in attribution table is not official strategy returns. The return is sourced from APX and is net of fees based on the strategy’s representative account.
Contributors detailed above represent the top five securities that contributed positively to performance during the quarter. Detractors detailed above represent the top five securities that detracted from performance during the quarter. Information detailed above is provided net of fees, includes cash, and is based on a representative Opportunity Equity account. Contribution listed above represents the period when the security was held during the quarter. For additional information on how Top Contributors and Top Detractors were determined and/or to obtain a list showing every holding’s contribution to the representative Opportunity Equity account performance contact us.
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. 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.
The views expressed in this commentary reflect those of Patient Capital Management analyst(s) as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Patient Capital Management disclaims any responsibility to update such views. 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.
Click for the Opportunity Equity Strategy Composite Performance Disclosure.
©2025 Patient Capital Management, LLC
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