Shares in beleaguered sports apparel and footwear giant Nike are up sharply as billionaire Bill Ackman has reinvested in the company, sparking turnaround hopes after months of mounting problems.
A filing with the U.S. Securities and Exchange Commission showed Ackman’s hedge fund, Pershing Square Capital Management, holds about three million shares of Nike, a stake now worth nearly $250 million and representing about 0.19% of the company.
But more than a particular percentage, it’s possible that the presence of Ackman, his estimated $9 billion net worth, and his prior, successful investment in Nike all suggest a rising confidence in the company and a potential ability to have a direct line to its management.
Shares in Nike rose 5% on Thursday, closing at $82.50 per share, and have increased 11% in the last five trading days. The recent spike is a reversal of sorts in a broader, year-to-date stock drop of nearly 23%—and a weak set of recent quarterly earnings that included a downgraded future outlook and Nike’s worst one-day market performance since becoming a public company in 1980.
Activist Intent?
Shortly before the Pershing Square filing became public, Wall Street speculation had grown of the possibility of an activist investor pushing to get more involved in Nike’s operations. In 2022, Ackman said he is pursuing a “quieter approach” in the investment activity through Pershing Square after a long history of shareholder activism and short selling.
Still, there is little doubt that Ackman holds significant influence in the market, and his renewed Nike involvement will bear close watching.
Parallel Corporate Struggles
The situation also bears some similarity to Disney’s recent episode with billionaire activist investor Nelson Peltz. The ESPN parent company ultimately was able to soundly defeat Peltz’s bid to acquire two board seats. But the lengthy debate over Disney strategy nonetheless provided a further spotlight on the company’s future direction, particularly that of ESPN, in the wake of unprecedented media industry disruption.
Nike, already in the midst of a $2 billion cost-cutting campaign that includes multiple rounds of layoffs, has been battling ongoing issues both internally and across the sporting goods and footwear business—while also working damage control for its MLB uniform debacle. The company additionally has seen rising competition from upstart brands such as On and Hoka.
