Shares of Nike (NYSE: NKE) were moving higher today after investors responded favorably to news that Bill Ackman's Pershing Square Capital Management Fund had taken a stake in the company, which was reported in Pershing Square's 13-F filing last night. As a result, shares of Nike were up 3.8% as of 11:43 a.m. ET on Thursday.
Nike's starting to look like a value stock
Ackman is one of the most respected and attention-grabbing fund managers on Wall Street. One of the investments he's known for is his successful bet on Chipotle when that company was still reeling from the E. coli crisis.
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Investors seem to think Ackman sees a similar value opportunity here. The sometimes-activist investor hasn't taken an activist stake in the sneaker maker, as he owns less than 0.2% of the company. He bought 3.04 million shares in the second quarter, worth approximately $250 million.
Ackman hasn't addressed the reasons why he purchased Nike shares at this time, but we may hear some commentary from him in a media interview in the near future. Nike is also one of the smallest positions in Pershing Square's portfolio, making up just 2.2% of the total holdings.
Will Ackman help Nike?
Ackman is unlikely to do anything to directly support Nike's recovery -- at least without accumulating a larger stake -- but investors tend to like it when high-profile billionaires like Ackman buy shares, as it signals an opportunity in the stock.
Nike still has a lot of work to do to engineer a recovery. CEO John Donahoe is increasingly under pressure, but it would be a mistake to write off a company that's dominated its industry for the last generation.
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Jeremy Bowman has positions in Chipotle Mexican Grill and Nike. The Motley Fool has positions in and recommends Chipotle Mexican Grill and Nike. The Motley Fool recommends the following options: long January 2025 $47.50 calls on Nike and short September 2024 $52 puts on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
