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2024-12-22 04:02 PM

Nike stock gains on continued interest in Ackman stake

Nike (NKE) is gaining on Friday as the general market drifts sideways. The sneaker mainstay and athletic brand is getting a sudden lift this week as news surfaced that hedge funder Bill Ackman’s Pershing Square Capital Management had taken a stake.

Besides Ackman’s high profile from days of yore when he was an active short-seller, the Nike stock purchase is big news since Ackman is well-known for his focused portfolios. Nike stock is now just one of 10 positions in the hedge fund’s portfolio.

The market is still digesting Thursday’s swift gains on the back of lower Consumer Price Index (CPI) inflation data. Friday’s preliminary Michigan Consumer Sentiment Index arrived at 67.8, an impressive expansion above the of 66.9 consensus, showing that US consumers are turning more optimistic by the day.

Nike stock news

In the 13F filing reported on Wednesday, Pershing Square Capital Management bought 3.04 million shares of Nike stock during the second quarter, which ended on June 30. This position now makes up 2.17% of the portfolio, but Ackman is known for steadily increasing his small number of positions over multiple quarters. So it is unlikely that he is finished.

Ackman had been a previous investor in Nike shares when he owned a little less than 6 million shares in late 2017, exiting the position for a gain north of $100 million.

The only other stocks that Ackman’s fund purchased in Q2 was Brookfield Corporation (BN) and Seaport Entertainment Group (SEG), as well as adding to its longtime Quality Brands International (QSR) holding. Additionally, Pershing Square reduced stakes in Chipotle Mexican Grill (CMG), Hilton Worldwide (HLT), Canadian Pacific Railway (CP) and Alphabet (GOOGL, GOOG). Chipotle, Restaurant Brands and Hilton Worldwide still comprise more than half of the entire portfolio.

The news comes as other analysts have taken a keen interest in the footwear maker. Williams Trading and Evercore ISI both had positive things to say in recent days. The former applauded the rehiring of Tom Peddie as the head of US wholesale, while the latter said Nike had likely reached a bottom after experiencing a poor market cycle.

"Based on our extensive channel work, we think Nike has started to take many of the early steps necessary to execute a turnaround," said Evercore ISI’s Michael Binetti.

BMO Capital Markets placed Nike on its list of 28 leading high-quality stocks earlier this week.

Nike stock forecast

Nike was down about 35% YTD before this week. Now that shares have jumped from the low $70s to the low $80s, everyone is suddenly excited. NKE stock is now above the 50-day Simple Moving Average (SMA) for the first time since late June.

The real test will be if Nike shares can overcome the $89 level, which had acted as support back in April. After that comes the 200-day SMA near $96. Long-term support from this summer sits at $71.

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