4. NIKE, Inc. (NYSE:NKE)
Number of Hedge Fund Holders: 72
The George Soros stock portfolio boosted its NIKE, Inc. (NYSE:NKE) stake by 18% in the second quarter of 2022, holding 348,235 shares worth $36.6 million, representing 0.63% on the total 13F securities. Soros Fund Management has owned a stake consistently in the American apparel and athleisure company since Q4 2020, although it initially invested in NIKE, Inc. (NYSE:NKE) back in Q4 2010.
On October 13, Raymond James analyst Rick Patel initiated coverage of NIKE, Inc. (NYSE:NKE) with an Outperform rating and a $99 price target. The stock is down year-to-date, crushed by industry-related constraints and macro headwinds, and the analyst expects a “challenging” second half of the year. While it is impossible to call the trough in equities, the analyst believes investors should adopt a longer-term view.
According to Insider Monkey’s data, 72 hedge funds were bullish on NIKE, Inc. (NYSE:NKE) at the end of the second quarter of 2022, compared to 67 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of the company, with 8.5 million shares valued at $873 million.
Here is what Leaven Partners has to say about NIKE, Inc. (NYSE:NKE) in its Q3 2022 investor letter:
“Nike: NKE shares were a top detractor this quarter on higher inventory balances leading to lower-than-expected gross margins for the next couple of quarters. The company reported 1Q23 sales and EPS beats, but freight costs, markdowns, and the strong dollar weighed on gross margins. Nike continues to expect low double-digit currency-neutral sales growth, but the strong dollar will reduce overall sales growth and discounted inventory will further reduce gross margins for the year.
Nike is, by far, the leading athletic footwear, apparel, and equipment company in the world with over $46 billion in revenue, $6 billion in 2021 annual free cash flow, and over $4 billion of excess cash. After working through its near-term currency and gross margin issues, we expect the company to return towards management’s guidance of at least 10% annual revenue growth, and return to its accelerating profit growth, as longer-term we expect margins to be materially aided by rising average sales prices (from both increased pricing and a mix shift to more premium products), the company’s deep innovation pipeline, a secular shift from the company’s traditional wholesale channels to a more direct-to-consumer approach (now 35% of revenues up from 16% ten years ago), and a more streamlined supply chain. We believe that the continued global secular growth trend towards active wear will continue to aid Nike’s top-line growth, while we expect the combined gross and operating margin improvements from its initiatives will drive long-term mid-teens or higher annual EPS growth for the foreseeable future.”
