Patient Capital Management is a Baltimore asset manager founded in 2020 by Samantha McLemore, CFA — Bill Miller's long-time co-manager (working together since 2002, running the flagship Opportunity Equity strategy since 2014). Continuing the Miller-school contrarian tradition, it practices "time arbitrage": exploiting behavioral mispricing to concentrate in controversial growth names (tech, healthcare, Bitcoin-related) at deep discounts to intrinsic value. Its site preserves Bill Miller's complete 1995-2022 market letters, alongside ongoing quarterly letters and webinars.
This report looks at the stock market in the second quarter of 2021. Overall, stocks went up, but there were big differences: tech and real estate companies did best, while small company stocks lagged. Inflation (rising prices) and whether the Federal Reserve (the US central bank) will raise interest rates were key concerns. Bitcoin fell sharply, while oil and gold rose. For regular investors, it suggests watching tech and real estate sectors, but being careful about high-priced stocks if rates go up. It also notes that cybersecurity risks are growing, which could benefit related companies.
In the second quarter of 2021, the U.S. vaccination rate reached 48%, but the Delta variant continued to spread, threatening the economic reopening. The U.S. Congress passed six antitrust bills, Amazon still acquired MGM for $8.5 billion, and China fined Alibaba $2.8 billion for antitrust violations
This section reviews the macroeconomic market environment in the second quarter of 2021, covering pandemic developments, policy trends, asset performance, and market style rotation. The report notes that despite progress in vaccination, the Delta variant of the virus remains a threat, while inflation expectations and the Federal Reserve's policy shift have become market focal points.
The report argues that the market overall rose in the second quarter, but structural divergence was significant: growth stocks regained leadership over value stocks, large-cap stocks outperformed mid- and small-cap stocks, and the technology and real estate sectors led gains. The author suggests that market concerns over inflation and interest rates have eased (the 10-year U.S. Treasury yield fell from 1.7% to 1.5%), but the Federal Reserve's rate hike expectations (two hikes by the end of 2023) remain a potential risk.
Comparison of Market Index and Sector Performance:
| Index/Sector | Return |
|---|---|
| Nasdaq Composite Index | +9.68% |
| S&P 500 | +8.55% |
| Dow Jones Industrial Average | +5.08% |
| Real Estate Sector | +13.09% |
| Information Technology Sector | +11.56% |
| Energy Sector | +11.29% |
Comparison of Market Cap and Style Performance:
| Index | Return |
|---|---|
| Russell 1000 (Large-Cap) | +8.54% |
| Russell Mid-Cap | +7.50% |
| Russell 2000 (Small-Cap) | +4.29% |
| Russell 1000 Growth | +11.93% |
| Russell 1000 Value | +5.21% |
Bond and Commodity Performance:
| Asset | Return |
|---|---|
| Long-Term U.S. Treasury Bonds | +6.80% |
| Barclays Aggregate Index | +1.83% |
| Gold | +3.15% |
| Crude Oil | +24.19% |