We recently published a list of Bill Ackman’s Stock Portfolio: Top 9 Stocks to Buy. In this article, we are going to take a look at where Nike, Inc. (NYSE:NKE) stands against other stocks to buy in Bill Ackman’s portfolio.
William Albert Ackman, more commonly known as Bill Ackman, is the founder and CEO of Pershing Square Capital Management, a hedge fund management company. Famous for his concentrated portfolio, with stakes in only 8 to 12 stocks at a time, Bill Ackman’s recent portfolio modification has revealed that 47% of his hedge fund is invested in just three stocks.
Analysis of his portfolio reveals that Bill Ackman invests in stocks that are mispriced relative to the long-term value of the company. Historically, this philosophy has served him well since Pershing Square’s total value was just under $13 billion by the end of the third quarter of 2024 with only 9 stocks.
A longtime supporter of the Trump administration, Ackman has been vocal about the benefits that the newly elected president will bring to the investment front. In addition to the prospects of deregulation and corporate tax cuts that could allow for stock prices to rise and have made many investors bullish on the market, Bill Ackman has more vested interests in the Trump office. Pershing has a roughly 10% stake in the common shares of the government-sponsored entities. He took to X to discuss his hypothesis about how Donald Trump could help these giants exit government conservatorship and be recapitalized, leading to substantial shareholder gains for Pershing Square.
In early 2024, Ackman launched a U.S. closed-ended fund called Pershing Square USA, Ltd., and talked about it during his 2024 letter to investors:
“The launch of PSUS is one of a number of strategic initiatives we plan to undertake which we believe will increase the long term sustainability of Pershing Square Capital Management, L.P., (“PSCM” or the “Investment Manager”), and will benefit PSH by reducing the performance fees that it pays. To this end, in June, we sold a 10% interest in PSCM, the proceeds of which will be used to anchor new fund launches including PSUS.”
However, Pershing Square officially canceled its IPO just one day after filing with the SEC due to a $2 billion listing as opposed to its original target valuation of $25 billion. Finally, while announcing the IPO cancellation on X, Ackman wrote “We will report back once we are ready to launch a revised transaction,” hinting at the possible launch of PSUS without listing shares on a stock exchange.
Our Methodology
The stocks discussed below were picked from Pershing Square’s Q3 2024 13F filings. They are compiled in the ascending order of Pershing Square’s stake in them as of September 30, 2024. In order to assist readers with more perspective, we have included the hedge fund sentiment regarding each stock using data from over 900 hedge funds tracked by Insider Monkey in the third quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A team of trainers and athletes displaying a wide range of athletic and casual footwear.
Nike, Inc. (NYSE:NKE)
Number of Hedge Fund Holders as of Q3: 75
Pershing Square’s Equity Stake: $1.44 Billion
Nike, Inc. (NYSE:NKE) is among Pershing Square’s newer investments; from having no stake in it by Q1 2024, Pershing Square purchased over 3.04 million shares in the company in Q2 and holds roughly 16.28 million shares of the company as of Q3 2024. The stock represented a little over 11% of Ackman’s portfolio. As opposed to 67 hedge funds that had stakes in Nike at the end of the previous quarter, 75 held its shares by Q3 2024.
Based in Oregon, Nike, Inc. (NYSE:NKE) is globally known for its athletic footwear and apparel. Employing over 83000 workers globally, it operates through three segments: Nike Brand, Converse, and Corporate. Nike Brand includes the geographical division of North America; Europe, Middle East & Africa; Greater China; Asia Pacific & Latin America; and Global Brand Divisions while Converse covers the entire supply chain for sneakers, apparel, and accessories. Corporate deals with the business of both Nike Brand and Converse that is managed through the company’s central foreign exchange risk management program.
Nike, Inc. (NYSE:NKE) reported its quarterly revenue for Q2 of fiscal year 2025 as $12.35 billion. The Nike Brand segment was responsible for over 96% of the company’s total revenue as it alone generated $11.95 billion in the quarter ending November 2024. The company boasted high second-quarter earnings for fiscal 2025, totaling $0.78 and beating a consensus estimate of $0.63 by $0.15.
Recently, Nike’s new CEO Elliot Hill openly admitted that he had long aspired to the corner office. However, he said his journey to the title was fueled majorly by his confidence in his leadership abilities, his passion for sports, and an “irrational love” for the Nike brand. Just two months into his tenure, Hill said that his leadership role at the company was his “destiny.”
Mar Vista Focus strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its second quarter 2024 investor letter:
“Nike maintains its position as the global leader in sportswear. However, its revenue growth has been hampered by a lack of innovation, and its recovery is further complicated by deteriorating macroeconomic conditions in the US and China. The company’s renewed focus on innovation and efforts to re-engage with wholesale channels may eventually help restore growth, but we believe increased skepticism regarding management’s ability to execute is justified.”
However, all through 2024, Nike, Inc. (NYSE:NKE) has been at the forefront of using innovative and technological advancements to improve upon its products and services: it strategically integrated machine learning, data science, augmented reality, and recommender models into its operations in a remarkable show of innovation. The company’s initiatives in 2018 and 2019, namely Nike Fit and Personalized Customer Experience have paved the way for the 2024 initiatives of Generative AI for Product Design, Athlete Imagined Revolution (A.I.R.) Project, and AI-Optimized Air Technology. These new efforts use innovative technologies like Generative AI, 3D printing, computational design, and virtual reality to dramatically enhance the consumer experience, optimize the supply chain, and fuel product innovation.
Overall, NKE ranks 6th on our list of stocks to buy in Bill Ackman’s portfolio. While we acknowledge the potential for 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 NKE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.