Billionaires Bill Ackman and Jeff Yass Are Pouring Into This Plagued Retail Stock. Here's Why It May Be a Smart Move.

Core Viewpoint - Hedge funds managed by Bill Ackman and Jeff Yass have recently increased their positions in Nike stock, indicating potential investor interest despite the company's recent struggles [1][2][3]. Company Overview - Nike has experienced a significant decline in stock value, dropping by 27% in 2024, making it one of the worst performers in the Dow Jones Industrial Average [3]. - Over the last decade, Nike has seen considerable growth in revenue and profit, but recent years have shown a noticeable deceleration in sales and profitability [4]. Strategic Changes - Nike has shifted to a digital-first distribution strategy, removing products from several brick-and-mortar retailers to market directly to consumers [5]. - This strategy has not yielded the expected results, leading to a disconnect with consumers, particularly younger demographics who are favoring competitors [6]. Leadership Changes - The company recently parted ways with CEO John Donahoe, which may signal upcoming changes in business strategy and organizational structure [7][8]. Valuation Insights - Valuing Nike stock is challenging due to the ongoing transition and uncertainty surrounding the company's future [8]. - Nike's current forward price-to-earnings (P/E) ratio has returned to levels seen 12 months ago, despite fluctuations in valuation [9]. Investment Outlook - There is cautious optimism regarding Nike's potential turnaround, with the brand remaining one of the most recognized globally [11]. - Investors may have opportunities to buy Nike stock at more favorable valuations as the company implements its turnaround efforts [12].