Fundsmith: ‘NIKE (NKE) has High Returns on Capital and Good Growth Rates’

Fundsmith LLP, an investment management firm, published its ‘Fundsmith Equity Fund’ year-end 2020 investor letter – a copy of which can be downloaded here. A return of 18.3% was recorded by the fund in the fourth quarter of 2020, outperforming its MSCI World benchmark that delivered a 12.3% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.op 5 holdings to have a peek at their top bets for 2021.

Fundsmith LLP, in their Q4 2020 investor letter, mentioned NIKE, Inc. (NYSE: NKE) and emphasized their views on the company. NIKE, Inc. is an Oregon-based footwear manufacturing company that currently has a $221.2 billion market capitalization. Since the beginning of the year, NIKE delivered a -0.30% return, but its 12-month gains are up 90.09%. As of March 10, 2021, the stock closed at $137.59 per share.

Here is what Fundsmith LLP has to say about NIKE, Inc. in their Q4 2020 investor letter:

“Other companies which we admire saw share price falls of over 40% at the height of the panic over COVID — Nike is probably familiar to you as the world’s leading sneaker and sporting apparel supplier, a company with high returns on capital and good growth rates — two characteristics which we seek. In the case of Nike we felt that few companies were as well adapted to digital distribution of its products which has become de rigeur as a result of the COVID induced restrictions.”

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Our calculations show that NIKE, Inc. (NYSE: NKE) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, NIKE, Inc. was in 82 hedge fund portfolios, compare to 75 funds in the third quarter. NIKE delivered a 2.51% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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Disclosure: None. This article is originally published at Insider Monkey.