Nike Looks Like It's About to Disappear From Bill Ackman's Portfolio. But the Billionaire Investor Is Really Doubling Down.

Group 1 - Pershing Square Capital Management, led by Bill Ackman, has taken a new stake in Nike, despite the stock being down over 31% in the last year due to increased competition and a loss of marketing appeal [1] - In early 2025, Pershing converted its Nike equity position, valued at over $1.4 billion, into deep in-the-money call options, which are expected to provide higher potential returns while limiting downside risk [3][4] - The upcoming 13F filings will not reflect Nike in Pershing's equity holdings, leading to a perception that the fund has sold its stake, while in reality, it has increased its exposure through options [5] Group 2 - Ackman and Pershing believe Nike has the potential for a significant turnaround, but this will require patience and strategic changes under the leadership of Elliot Hill, who has returned to the company [6] - Hill's strategy includes refocusing on sports products, reducing emphasis on lifestyle items, and strengthening relationships with wholesale partners, which is a shift from previous pandemic-era strategies [7] - The brand's strong recognition and dominant position in a consolidated footwear industry are seen as key factors that could allow Nike to double its margins with a successful turnaround [8] Group 3 - Nike's current stock trades at approximately 22.5 times earnings, below its historical average of 32.5, but at 35 times forward earnings, which may still be considered expensive [9] - There is a need for further evidence of earnings growth for investors to become more confident in the stock, as the turnaround efforts are still in the early stages [9]