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 says the fund earned 4.32% last quarter, beating the S&P 500 by about 2%. The manager is cautiously optimistic, seeing some long-term opportunities rebound after being overly sold off. He bought Broadcom (AVGO), calling it a key AI infrastructure play with cheap valuation and fast profit growth. He also bought call options on Meta (META), betting on its new AI assistant Muse, which got 5 million downloads in 22 days. He sold Illumina, JD.com, and Genius Sports to focus on fewer, bigger bets.
In one sentence: the author holds a【cautiously optimistic】stance toward the market, believing that overly shorted long-term opportunities are recovering, and is actively positioning in AI infrastructure and payment stocks.
The portfolio generated a net fee return of 4.32% this quarter, outperforming the S&P 500's 2.30%. Attribution analysis shows that allocation, stock selection, and interaction effects collectively contributed to the excess return. Market breadth narrowed (the S&P 500 Equal Weight Index fell 1.90%), with large-cap stocks regaining dominance. However, the portfolio remained focused on long-term opportunities that were overly shorted, and some stocks purchased after sharp declines earlier this year have begun to recover.
Performance Comparison: The portfolio's net fee return of 4.32% versus the S&P 500 Index's 2.30% represents an excess return of approximately 2 percentage points. The largest contributors were Precigen Inc. Warrants, Precigen Inc. (PGEN), Meta Platforms Inc. (META), Fidelity Wise Origin Bitcoin Fund (FBTC), and Meta Call Options (C540 1/21/28); the largest detractors were QXO Inc. (QXO), Norwegian Cruise Line Holdings Ltd. (NCLH), UnitedHealth Group (UNH), United Airlines Holdings Inc. (UAL), and CVS Health Corp (CVS).
Sector Allocation: Overweight in healthcare, financials, consumer discretionary, communication services, and energy; zero weight in consumer staples, materials, utilities, and real estate; underweight in information technology. The portfolio held 37 positions at quarter-end, with the top ten accounting for 55.3% of assets (versus 39.1% for the index), and an active share of approximately 91.6%.
Payment stocks performed strongly: Chime rose 30%, Global Payments rose 13%, and Adyen rose 6%. The author believes all three still have significant upside, with distinct core rationales for each.
Adobe (ADBE) has begun to recover from its lows after being built during the "SaaS crash." Despite ongoing AI concerns weighing on the narrative, the company has beaten revenue and EPS estimates for two consecutive quarters and raised its full-year guidance. The author believes Adobe is on the right path to integrating and monetizing AI through platforms like Firefly. The company continues to generate substantial free cash flow, with a free cash flow yield of 12%, and has net repurchased 18% of its outstanding shares over the past five years.
New position initiated in Broadcom Inc. (AVGO). The author believes Broadcom is one of the clearest beneficiaries of AI infrastructure spending, but its stock has lagged the broader AI trade due to concerns over customer concentration, competition, and the sustainability of demand for custom chips. These concerns have created an attractive entry point.
Broadcom is uniquely positioned at two key AI infrastructure bottlenecks: custom accelerators and high-performance networking. Hyperscale cloud providers are increasingly using custom chips to reduce the cost and power consumption of large-scale AI workloads, and Broadcom is one of the few companies capable of supporting this transition at scale. Management expects AI semiconductor revenue to reach approximately $58 billion in fiscal 2026 and has guided for a doubling to approximately $230 billion in fiscal 2027 and 2028 (nearly 100% year-over-year growth). Meanwhile, its high-margin software business provides stability and substantial free cash flow. The stock currently trades at approximately 20 times forward earnings, in line with the market, but its earnings growth rate exceeds the market by 4.5 times.
New position initiated in Meta Platforms Inc. (META) options, first buying $600 call options expiring September 2027, then rolling into $540 call options expiring January 2028. The position was established early in the quarter after Meta's stock fell due to high AI spending and unclear monetization paths. The author disagrees with the market's pessimism: Meta has one of the largest global user bases, significant operating cash flow, the scale and distribution resources needed to compete in AI, and a proven management team.
The narrative began to shift late in the quarter: Zuckerberg discussed multiple monetization paths beyond the core advertising business, the company launched its personal AI assistant Muse, which quickly topped the U.S. app store charts, and Sensor Tower data showed approximately 5 million downloads in its first 22 days. The author states, "While we are still very early in AI's evolution, we continue to believe the incumbents with scale, distribution, and significant cash generation are best positioned to compete."
The portfolio exited four positions this quarter: Illumina (ILMN), JD.com (JD), Genius Sports (GENI), and Meta Call Options (C600 9/17/27). Illumina was exited as its stock price approached the author's estimated intrinsic value, with proceeds reinvested into new ideas; JD was exited to reallocate to opportunities with better risk-reward profiles; Genius Sports was a small position exited to continue concentrating the portfolio into fewer, larger holdings.
| Position | Action | Key Logic | Key Data |
|---|---|---|---|
| Broadcom Inc. (AVGO) | New position | Unique positioning at the AI infrastructure bottleneck; undervalued long-term compounder | ~20x forward earnings, earnings growth >4.5x the market; AI semiconductor revenue ~$58B in FY2026, doubling in each of 2027/2028 |
| Meta Platforms Call Options (C600 9/17/27) | New position, then rolled | Disagrees with market pessimism on AI spending; constructive on monetization path | Established at quarter start, later rolled to C540 1/21/28 |
| Meta Platforms Call Options (C540 1/21/28) | New position (after roll) | Same as above | Muse reached ~5M downloads in 22 days since launch |
| Illumina Inc. (ILMN) | Exited | Price near intrinsic value; reallocating into new ideas | Not disclosed |
| JD.com Inc. (JD) | Exited | Reallocating to better risk-reward opportunities | Not disclosed |
| Genius Sports Ltd. (GENI) | Exited | Small position; concentrated portfolio | Not disclosed |
| Meta Platforms Call Options (C600 9/17/27) | Exited | Rolled to C540 1/21/28 | Not disclosed |
| Adobe Inc. (ADBE) | Held – monitoring | Recovered from "SaaS bust" lows; AI integration is sound | 12% free cash flow yield; five-year net buybacks of 18% of shares outstanding |
| Chime Financial Inc. (CHYM) | Held – monitoring | Early stage of a shared-scale economic model | Up 30% this quarter |
| Global Payments Inc. (GPN) | Held – monitoring | Market overly pessimistic; business is highly sticky | 5x 2027 EPS, 17% free cash flow yield |
| Adyen NV (ADYEN) | Held – monitoring | Leading next-generation payments company; reasonable valuation | 16.6x 2027 adjusted earnings; sustaining ~20% growth |
| Precigen Inc. Warrants | Held – monitoring | Largest contributor this quarter | Not disclosed |
| Precigen Inc. (PGEN) | Held – monitoring | Largest contributor this quarter | Not disclosed |
| Meta Platforms Inc. (META) | Held – monitoring | Largest contributor this quarter | Not disclosed |
| Fidelity Wise Origin Bitcoin Fund (FBTC) | Held – monitoring | Largest contributor this quarter | Not disclosed |
| QXO Inc. (QXO) | Held – monitoring | Largest detractor this quarter | Not disclosed |
| Norwegian Cruise Line Holdings Ltd. (NCLH) | Held – monitoring | Largest detractor this quarter | Not disclosed |
| UnitedHealth Group (UNH) | Held – monitoring | Largest detractor this quarter | Not disclosed |
| United Airlines Holdings Inc. (UAL) | Held – monitoring | Largest detractor this quarter | Not disclosed |
| CVS Health Corp (CVS) | Held – monitoring | Largest detractor this quarter | Not disclosed |
The quarter's largest contributors were Precigen (PGEN) and its warrants, while the biggest drags were QXO, NCLH, UNH, and CVS. The author details the rationale behind each position's movement and reaffirms long-term conviction in these companies.
Largest Contributors:
Largest Detractors:
| Ticker | Direction | Author's One-Sentence View | Key Data |
|---|---|---|---|
| Broadcom Inc. (AVGO) | New Position | Unique positioning in AI infrastructure bottlenecks, an underestimated long-term compounder | ~20x forward earnings, earnings growth >4.5x market; AI semiconductor revenue ~$58B in FY2026, doubling in FY2027 and FY2028 each |
| Meta Platforms Call Options (C540 1/21/28) | New Position | Disagrees with market pessimism on AI spending, sees clear monetization path | Muse reached ~5M downloads in 22 days since launch |
| Precigen Inc. (PGEN) | Hold & Watch | Market underestimates its potential to evolve from a single-product company into a biotech platform | Papzimeos approved, granted orphan drug designation and FDA platform designation |
| Precigen Inc. Warrants | Hold & Watch | Same as above | Same as above |
| Meta Platforms Inc. (META) | Hold & Watch | Possesses scale, distribution, and cash generation capabilities, a long-term winner in AI application evolution | 3.6B daily active users, Muse penetration rate only ~0.1% |
| Chime Financial Inc. (CHYM) | Hold & Watch | Early stage of scale economy sharing model, sustainable reinvestment | Up 30% this quarter |
| Global Payments Inc. (GPN) | Hold & Watch | Market overly pessimistic, business has strong stickiness | 5x 2027 EPS, 17% free cash flow yield |
| Adyen NV (ADYEN) | Hold & Watch | Leading next-generation payment company, valuation reasonable | 16.6x 2027 adjusted earnings, sustained growth ~20% |
| Adobe Inc. (ADBE) | Hold & Watch | Recovering from "SaaS crash" lows, AI integration on the right track | 12% free cash flow yield, net repurchased 18% of outstanding shares over five years |
| QXO Inc. (QXO) | Hold & Watch | Pullback seen as accumulation opportunity, long-term value creation thesis unchanged | Targeting annual revenue over $50B in the next decade, expected $13.5B this year |
| Norwegian Cruise Line Holdings Ltd. (NCLH) | Hold & Watch | Issues are fixable, new management and activist investor involvement, undervalued | Leverage higher than peers, significant discount relative to peers |
| UnitedHealth Group (UNH) | Hold & Watch | Diversified revenue model provides buffer, confidence in long-term profitability and competitive position | 2.2% dividend yield, ongoing buyback program |
| Illumina Inc. (ILMN) | Liquidated | Share price near intrinsic value, reallocating to new ideas | Not disclosed |
| JD.com Inc. (JD) | Liquidated | Reallocating to better risk-reward opportunities | Not disclosed |
| Genius Sports Ltd. (GENI) | Liquidated | Small position, concentrating the portfolio | Not disclosed |
| Meta Platforms Call Options (C600 9/17/27) | Liquidated | Rolling to C540 1/21/28 | Not disclosed |