We recently compiled a list of the Bill Ackman Stock Portfolio: 8 Top Stock Picks. In this article, we are going to take a look at where Nike, Inc. (NYSE:NKE) stands against the other the Bill Ackman’s Stock Portfolio.

Bill Ackman is an investor whose portfolio is well-positioned to benefit from the economic environment’s improvement as interest rates trend down. In addition to being vocal about investment opportunities especially when there is a high risk reward, Ackman also does not shy away from giving his opinion on what he thinks is wrong. In September he took on the Brazilian Supreme Court justice on its decision to block Elon Musk’s social networking app. The billionaire investor reiterated that the decision could end up driving away investors and harming the country.

The “illegal shut down of X and account freeze at Starlink put Brazil on a rapid path to becoming an uninvestable market,” Ackman said in a post on X. “China committed similar acts leading to capital flight and a collapse in valuations. The same will happen to Brazil unless they quickly retreat from these illegal acts.”

It is not the first time that the legendary investor has echoed his opinion having already withheld a huge donation from Harvard University because of purported anti-Semitism. He also played a role in bringing down President Claudine Gay.

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Can Geopolitical Tensions and Inflation Impact Ackman’s Portfolio?

Ackman stands out among the top echelons because he focuses on high-quality large-cap companies with limited downside potential. Over the past five years, the billionaire investor has generated a 31% annualized return, affirming why he is one of the most revered investors on Wall Street.

The fundamental value investor has made a name for himself in investing and pushing for strategic changes in companies in a bid to increase shareholder value. Ackman’s investment strategy focuses on holding a limited number of companies, mostly eight to 12, for the long term in his portfolio.

As one of the sharpest investors on Wall Street,  Bill Ackman’s stock portfolio is well-positioned to benefit from an improving investment environment. The US Federal Reserve cutting interest rate by 50 basis points is increasingly emerging as a key catalyst poised to push the overall market higher.

While the S&P 500 was already up by more than 15% before the interest rate cut, it is currently flirting with record highs with more than 20% gains. The rally came on growing optimism that the lower interest rate environment would support the US economy, which was struggling, as depicted by weakness in the labor market and slow manufacturing.

While an accommodative interest rate environment is a must-welcome factor that could drive Ackman’s portfolio higher, a combination of regional conflict in the Middle East and rising inflation could curtail the gains. According to Stephen Roach, a senior fellow at Yale Law School’s Paul Tsai China Center, a completely blown conflict in the Middle East could trigger inflationary risks even as central banks start easing monetary policy.

Roach expects the markets to whipsaw back and forth amid heightened volatility in response to the geopolitical tensions. Kelvin Tay, regional chief investment officer at UBS Global Wealth Management, has already warned that Israel’s response to Iran’s attack could throw the Fed’s 50 basis point rate cut off track.

Bill Ackman’s portfolio could feel the effects of escalating geopolitical tensions in the Middle East on the investment environment turning jittery.  The portfolio suffered one of its biggest losses in July as it erased most of its 2024 gains. The portfolio lost 4.7% in the month, fueled by losses in one of Ackman’s investments in a large record label.

The string of negative losses persisted, with Ackman struggling to generate interest in his plan for one of his investment firms in the market. After failing to garner enough investor interest, the planned launch of Pershing Square USA (PSUS) IPO, which Bill Ackman once claimed could raise $25 billion, was canceled.

Ackman confirmed the withdrawal, reiterating that they will revisit the IPO once they are ready to launch a revised transaction. The pullback comes on investors raising concerns about the proposed fund’s structure and where he knew cash would be invested given that the market is at an all-time high with valuations getting out of hand. With that, let’s dig deeper into Bill Ackman’s stock portfolio.

Our Methodology

We sifted through Pershing Square’s Q2 2024 13F filings and picked the hedge fund’s top 8 stock picks. The stocks are ranked in ascending order of Pershing Square’s stake in them, as of June 30. We have also mentioned the hedge fund sentiment around each stock.

At Insider Monkey, we are obsessed with 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).

Nike, Inc. (NYSE:NKE)

Number of Hedge Fund Holders as of Q2: 66

Pershing Square’s Equity Stake: $229.13 Million 

NIKE, Inc. (NYSE:NKE) is a consumer cyclical investment play in Bill Ackman’s stock portfolio, offering exposure in the design, development, marketing, and sale of athletic footwear, apparel, equipment, accessories, and services worldwide. The hedge fund initiated a new stake in the company, acquiring 3.04 million shares valued at $229.13 million, representing 2.2% of their portfolio.

The company has been under pressure over the past few years due to soaring inflation and a spike in interest rates. Revenues were flat in the first quarter of the year as the company felt the full brunt of consumer purchasing power coming under pressure amid high interest rates and a focus shift to necessities.

However, Ackman has contended to hold the stock in his portfolio, banking on the company’s long track record and ability to turn around. The company is already positioning itself for the future following the recent management changes that saw the ousting of CEO John Donahoe, who was replaced by former executive Elliott Hill.

The wonderful thing about market leaders is that bad management for a few years usually doesn’t destroy the company. Although there is competition, NIKE, Inc. (NYSE:NKE)’s market share still surpasses that of most of its main rivals. It still boasts the biggest advertising budget, deepest pockets, and a roster of elite sponsors, including LeBron James, Michael Jordan, Caitlin Clark, and numerous others.

NIKE, Inc. (NYSE:NKE) delivered solid first-quarter earnings for fiscal 2025, totaling $0.70 against a consensus estimate of $0.52. On the other hand, other metrics were disappointing, and its revenues of $11.59 billion fell short of analysts’ expectations of $11.64 billion by roughly 0.5%.

The management suggested that the year 2025 will be a transitional one, highlighting the ongoing need for innovation and improved logistical efficiency to overcome present difficulties. In Q2 2024, there were 66 hedge funds that held positions in the stock, with total stakes amounting to $3.19 billion.

Mar Vista Focus strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its first quarter 2024 investor letter:

“NIKE, Inc.’s (NYSE:NKE) recent earnings report was a mixed bag. While revenue met expectations and earnings exceeded them, the stock price dipped due to management’s cautious outlook for fiscal 2025. The company is currently undergoing a period of internal restructuring and product line adjustments, which is expected to lead to flat revenue growth in the first half of the coming fiscal year. However, this transition aims to position Nike for long-term success.

Our conviction in Nike remains high, and we expect it to emerge stronger and more competitive once the restructuring is complete despite the softer revenue forecast. Nike still anticipates earnings will grow around 10% in calendar 2024 and will accelerate to 15% in 2025 as execution normalizes.”

Overall NKE ranks 8th on our list of Bill Ackman Stock Portfolio: 8 Top Stock Picks. While we acknowledge the potential of 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. If you are looking for an AI stock that is more promising than NKE, check out our report about the cheapest AI stock.

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