Patient Capital Management, a value investing firm, released its “Patient Capital Opportunity Equity Strategy” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. During the quarter the strategy returned 17.6% net of fees compared to the S&P 500’s 11.7% return. The portfolio’s outperformance can be attributed to a three-factor model, where interaction, selection, and allocation effects all played a significant role. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Patient Capital Management featured stocks such as Royalty Pharma plc (NASDAQ:RPRX) in the fourth quarter 2023 investor letter. Headquartered in New York, New York, Royalty Pharma plc (NASDAQ:RPRX) is a buyer of biopharmaceutical royalties and a funder of innovations in the biopharmaceutical industry. On January 30, 2024, Royalty Pharma plc (NASDAQ:RPRX) stock closed at $28.68 per share. One-month return of Royalty Pharma plc (NASDAQ:RPRX) was 3.39%, and its shares lost 26.27% of their value over the last 52 weeks. Royalty Pharma plc (NASDAQ:RPRX) has a market capitalization of $17.196 billion.
Patient Capital Management stated the following regarding Royalty Pharma plc (NASDAQ:RPRX) in its fourth quarter 2023 investor letter:
“We built up a position in Royalty Pharma plc (NASDAQ:RPRX) during the quarter. Royalty Pharma is the largest buyer of biopharmaceutical royalties. The stock traded down throughout 2023 hitting a low of $26.21 in October below its IPO price of $28 in 2020 despite revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) being materially higher. The company is in the business of buying royalties, originally funded by debt with profits recycled into new opportunities. As interest rates rose throughout the year, the stock came under pressure as fears of a smaller spread between royalty deal IRRs and the cost of capital hit the stock. This fear looks overblown with only 21% of current debt being variable and the majority of its fixed rate debt not due until after 2030. With an average cost of debt of 5% and 2023 deal internal rates of return (IRRs) averaging low teens, we believe the model still works. This environment has only served to grow the total addressable market. Run by a proven business leader, we believe the company can continue to invest at attractive spreads. Trading at just 8x earnings, we believe you are getting an attractive entry point to own a leader in the space.”
A biopharmaceutical facility with technicians working on a manufacturing line of treatments and preventions.
Royalty Pharma plc (NASDAQ:RPRX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held Royalty Pharma plc (NASDAQ:RPRX) at the end of third quarter which was 32 in the previous quarter.
We discussed Royalty Pharma plc (NASDAQ:RPRX) in another article and shared the list of most promising stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
