Sustainable Growth Advisers (SGA), an investment management company, released its third-quarter investor letter for its “U.S. Large Cap Growth Strategy.” A copy of the letter can be downloaded here. The portfolio returned -1.3% (Gross) and -1.4% (Net) in the third quarter, compared to a 10.5% return for the Russell 1000 Growth Index and an 8.1% return for the S&P 500 Index. SGA’s investment objective is to invest in high-quality growth businesses expected to achieve consistent mid-teens earnings growth, accompanied by stable revenue and cash flow. However, in Q3, the market leadership was adverse for SGA’s investment style as lower-quality stocks and cyclical industries outperformed. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, the SGA U.S. Large Cap Growth Strategy highlighted stocks such as NIKE, Inc. (NYSE:NKE). NIKE, Inc. (NYSE:NKE) is a sportswear company that designs and distributes athletic and casual footwear, apparel, equipment, accessories, and services. The one-month return of NIKE, Inc. (NYSE:NKE) was -3.01%, and its shares lost 13.52% of their value over the last 52 weeks. On December 31, 2025, NIKE, Inc. (NYSE:NKE) stock closed at $63.71 per share, with a market capitalization of $94.176 billion.
SGA U.S. Large Cap Growth Strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its third quarter 2025 investor letter:
“NIKE, Inc. (NYSE:NKE) is an iconic sportswear brand that has built its business around promoting a healthier lifestyle, offering products that combine performance, utility, and durability, all driven by technology and innovation. Nike’s gear has become a staple not only for athletes but also for casual wearers, propelled by innovation and strong execution in marketing and supply chain management. The company’s pricing power is anchored in its brand strength and technology, supported by a robust supply chain and distribution network. Competitors have lower margins, so any price war would impact them more than Nike. Repeatable revenues are driven by the nature of sportswear, which wears out over time and leads to repeat purchases, with 65% of sales coming from shoes, a category known for customer loyalty and stickiness. Nike’s revenue in developed markets is growing at mid-single-digit rates, while the rest of the world is growing even faster, fueled by increasing sports participation globally, rising sports spend per capita, greater e-commerce sales, and deeper penetration into emerging markets.
We had originally purchased Nike in U.S. Large Cap Growth portfolios in 2015 and held the position for nearly six years. Late in 2021, we liquidated the position due to a heightened valuation and short-term concerns around manufacturing and supply chain issues, as well as a volatile operating environment in China. Nike is currently embarking upon a change in strategic direction following a CEO transition to Elliott Hill, who is now roughly a year into his tenure. The company has rehired significant product/innovation talent, begun to reengage with previously abandoned wholesale distribution accounts, and is in the midst of managing down its classic franchises (to be essentially complete within the next six months) and opening up room in the marketplace for a strong flow of new innovative products in the coming quarters. We believe the business has bottomed out, with improvements expected each quarter going forward. Nike’s most recent financial results showed some early positive indications on product innovation and an improving order book. We see a pathway for the company to expand its operating margins by approximately 500bps over the next three years to be closer to historical levels, driven by a return to organic revenue growth and operating leverage, which will support strong double-digit earnings growth for the next several years. We have great confidence in Nike’s new leadership and expect they will succeed in the revitalization of an iconic business, delivering a sharp rebound in earnings growth in 2026 and 2027 following this reset in 2025. …” (Click here to read the full text)
NIKE, Inc. (NYSE:NKE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 89 hedge fund portfolios held NIKE, Inc. (NYSE:NKE) at the end of the third quarter, up from 81 in the previous quarter. While we acknowledge the risk and potential of NIKE, Inc. (NYSE:NKE) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NIKE, Inc. (NYSE:NKE) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered NIKE, Inc. (NYSE:NKE) and shared the list of most active US stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q3 2025 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.
