Patient Capital Management, based in Baltimore, released its first-quarter 2026 investor letter for the “Patient Opportunity Equity Strategy,” available for download here. The strategy’s long-term value approach aims to build wealth over time. It returned -5.96% net of fees in Q1, compared to the S&P 500’s -4.33% return. As per three-factor performance attribution model the underperformance was due to selection and interaction effects, partly offset by allocation effects. The year started strongly with markets reaching an all-time high in late January, then reversed. AI fears sparked a “SaaS pocalypse,” while ‘hyperscalers’ CAPEX worries affected returns. Software debt and illiquid markets unsettled private credit, leading most BDCs to restrict redemptions. Middle East conflicts pushed crude oil prices higher, further increasing the risk of inflation. Please review the Strategy’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, Patient Opportunity Equity Strategy highlighted Adobe Inc. (NASDAQ:ADBE) as a new addition. Adobe Inc. (NASDAQ:ADBE) is a multinational technology company that offers creative, digital media, and document management products. On April 10, 2026, Adobe Inc. (NASDAQ:ADBE) closed at $225.35 per share. One-month return of Adobe Inc. (NASDAQ:ADBE) was -10.53%, and its shares lost 35.78% over the past 52 weeks. Adobe Inc. (NASDAQ:ADBE) has a market capitalization of $91.09 billion.
Patient Opportunity Equity Strategy stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its Q1 2026 investor letter:
“We initiated a position in Adobe Inc. (NASDAQ:ADBE), a casualty of the “SaaS-pocalypse”. Adobe is the dominant platform for creative professionals, holding a near-monopoly position across document management, digital design, and marketing software. Despite this strong competitive position, the stock has been weighed down by investor concerns around AI disruption to its core creative tools business. We believe these fears are overblown. You do not need to believe much for there to be attractive upside in the name. The company’s Document Cloud and Experience Cloud businesses represent durable, high-margin recurring revenue streams with limited disruption risk, and the company continues to incorporate AI into its product suite with its Firefly generative AI platform already beginning to monetize. If you simply believe the company can grow the bottom line at 7.5% annually over the next five years, the stock is worth roughly 60% more than where it trades today. The company continues to generate significant free cash flow, trading at a 10% FCF yield, and has returned meaningful capital to shareholders through buybacks, repurchasing a net 21% of shares outstanding over the last ten years.”
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