We recently published a list of Billionaire Bill Ackman’s 7 Stock Picks with Huge Upside Potential. In this article, we are going to take a look at where NIKE, Inc. (NYSE:NKE) stands against other billionaire Bill Ackman’s stock picks with huge upside potential.
Known commonly as Bill Ackman, William Albert Ackman is the founder and Chief Executive Officer of Pershing Square, a hedge fund renowned for its focused investment strategy and high-conviction portfolio. Ackman is known for maintaining a highly concentrated investment approach, often holding stakes in only 8 to 12 companies at any given time. By the end of the fourth quarter of 2024, Pershing Square’s portfolio was valued at $12.66 billion and included ten stocks, with over 50% of the fund’s capital concentrated in just the top four investments. This exemplifies Ackman’s commitment to identifying and capitalizing on undervalued opportunities, favoring companies that he believes are mispriced in relation to their intrinsic, long-term value.
Ackman’s investment philosophy has largely centered on value-based principles and activist strategies. His ability to identify market inefficiencies and apply pressure for change has yielded significant returns in the past. Pershing Square’s portfolio selections typically reflect this strategy, with a strong emphasis on companies with solid fundamentals and potential for operational or financial turnaround.
In early 2024, Ackman took a notable step by launching a U.S. closed-end fund named Pershing Square USA, Ltd. However, the initial public offering (IPO) of the fund was abruptly canceled just one day after filing with the Securities and Exchange Commission (SEC). The cancellation followed an unexpected drop in valuation from an intended $25 billion to just $2 billion. Following the cancellation, Ackman posted on the social media platform X that the firm would “report back once we are ready to launch a revised transaction,” suggesting that Pershing Square USA may still proceed in the future without a traditional stock exchange listing.
Ackman’s active engagement with both market trends and political developments illustrates his multifaceted approach to investing. As Pershing Square continues to evolve, close attention is being paid to the stocks within its concentrated portfolio, particularly those with the highest upside potential in light of current economic and political tailwinds.
Our Methodology
For this list, we searched through Pershing Square’s Q4 2024 13F filings to identify billionaire Bill Ackman’s stock picks with the highest upside potential. We compiled the equities with upside potential higher than 12% at the time of writing this article and analyzed why they stood out as sound potential investments. Finally, we ranked the stocks based on the ascending order of their upside potential. To assist readers with more context, we mentioned the hedge fund sentiment around each stock using data from 1,009 hedge funds tracked by Insider Monkey in the fourth 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 363.5% since May 2014, beating its benchmark by 208 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 Q4: 73
Pershing Square’s Equity Stake: $1.42 Billion
Upside Potential as of May 5: 35.43%
NIKE, Inc. (NYSE:NKE), headquartered in Oregon, is a globally recognized leader in athletic footwear, apparel, and accessories. Employing more than 83,000 people worldwide, the company operates through three primary segments: Nike Brand, Converse, and Corporate.
In its most recent quarterly earnings report for the three months ending February 28, Nike Inc. (NYSE:NKE) reported earnings per share of $0.54, significantly surpassing consensus estimates of $0.29. Revenue reached $11.27 billion, also beating projections of $11.01 billion. However, the performance represented a decline from the same period the previous year, when Nike posted a net income of $1.17 billion, or $0.77 per share, on $12.4 billion in revenue. This year’s net income declined to $794 million, reflecting a 32% drop in profits compared to the year-ago period.
The sales decline, approximately 9% year-over-year, was attributed to weakened demand in January and February, which followed strong December holiday performance. NIKE, Inc. (NYSE:NKE) also experienced margin pressure during the quarter, as gross margin dropped by 3.3 percentage points to 41.5%, missing analysts’ expectations of 41.8%. This contraction was largely due to increased discounts, higher product costs, and a need to clear out outdated inventory to make room for new and more innovative product lines.
Direct-to-consumer sales also declined, with revenue from Nike’s owned channels dropping 12% to $4.7 billion, while wholesale revenue slipped 7% to $6.2 billion. The broader retail environment has been challenged by declining consumer sentiment and weaker-than-expected retail sales in both January and February.
Compounding these challenges, the imposition of a new 20% U.S. tariff on goods imported from China has placed additional strain on Nike’s cost structure. According to a recent manufacturing disclosure, approximately 24% of Nike’s suppliers and manufacturers are located in China. Without a clear strategy to offset these new costs, Nike’s profit margins are likely to remain under pressure. The company has yet to indicate how it plans to address the financial impact of these duties.
Despite these short-term setbacks, NIKE, Inc. (NYSE:NKE) maintains a strong position within the retail sector and remains a brand with global reach and customer loyalty. With an upside potential of 35.43%, the stock continues to be seen as an attractive investment opportunity for long-term growth.
Overall, NKE ranks 1st on our list of billionaire Bill Ackman’s stock picks with huge upside potential. While we acknowledge the potential of NIKE, Inc. (NYSE:NKE) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. 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 this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
