Investors anticipated that the return of billionaire William Ackman as a stakeholder would lead to a turnaround at the sportswear behemoth, which has been struggling with strategic errors and fierce competition. As a result, Nike shares increased by almost 4% on Thursday.
According to a filing on Wednesday, Ackman’s hedge fund Pershing Square Capital Management currently holds nearly 3 million Nike shares, or a holding of about 0.19%. Plans for the investment have not yet been disclosed by him.
“He’s going to have the ear of the executives at Nike and be able to lend some influence on maybe how to get the ship righted, as it were, for Nike at this point to try and find their way back home,” said Brian Mulberry, client portfolio manager at Zacks Investment Management, which owned $25.79 million worth of Nike shares as of June.
Given that the business has predicted a decline in yearly sales for fiscal 2025 and that the stock has lost almost a third of its value this year, some Wall Street analysts and investors have speculated that CEO John Donahoe may be replaced.
The ultimate objective, according to Art Hogan, chief market strategist at B Riley Wealth, “will be replacing the person that sits in the corner office” when an activist investor steps in.
“And I say that because the template for that has been very clear this week in the form of Starbucks.”
Earlier this week, Starbucks acquired the CEO of Chipotle, Brian Niccol, and used the seasoned businessman to drive development at its coffee shops. Niccol was the driving force behind the recovery of the burrito firm.
One of Ackman’s pressure campaigns, which has frequently resulted in CEO changes at businesses including J.C. Penney and Air Products & Chemicals, also led to Niccol joining Chipotle in 2018.
Around the time that Nike was losing market share in North America against an Adidas that had been revitalized, Ackman made his last investment in the company in late 2017.
A few months later in 2018, he left Nike, having gained around $100 million from selling his 0.71% stake—an unusual passive investment for the billionaire.
On Thursday, investors and analysts made suggestions that it might be early in Ackman’s second tenure as an investor at Nike and that he would need to accumulate a greater position to have an influence.
Adidas had a forward price-to-earnings ratio of 36.75, while Nike’s was 24.26, a standard benchmark for assessing stocks.
