5 American Stocks with High Exposure to China

3. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 72

NIKE, Inc. (NYSE:NKE) manufactures and markets athletic footwear, apparel, equipment, and accessories worldwide. According to Barron’s, as of May 2022, NIKE, Inc. (NYSE:NKE) has 18% revenue exposure to China. Exane BNP Paribas analyst Laurent Vasilescu on August 9 downgraded NIKE, Inc. (NYSE:NKE) to Neutral from Outperform with a price target of $118, down from $151. NIKE, Inc. (NYSE:NKE) highlighted a strategy to increase revenues by high-single to low-double digits and reach a high-teen EBIT margin by FY25 and these targets were mentioned in last July’s 10-K filing, the analyst told investors. However, he observed that these FY25 financial targets were redacted in the 10-K recently released and these targets might be “on pause” due to growing uncertainty in China. NIKE, Inc. (NYSE:NKE) is also experiencing likely market share losses and increased discounting in the United States, its biggest market, contended the analyst.

Among the hedge funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management featured as the largest stakeholder of the company in Q2, with 8.5 million shares worth about $873 million. Overall, 72 hedge funds were bullish on the stock at the end of June, up from 67 funds in the earlier quarter. 

In its Q4 2021 investor letter, ClearBridge Investments highlighted a few stocks and NIKE, Inc. (NYSE:NKE) was one of them. Here is what the fund said:

“NIKE, Inc. (NYSE:NKE) is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. NIKE, Inc. (NYSE:NKE) is also still under-indexed to the women’s category, which we see as a significant ongoing catalyst.”