2. Nike, Inc. (NYSE: NKE)
Number of Hedge Fund Holders: 78
Nike, Inc. (NYSE: NKE) is an American multinational organization that designs, manufactures, and markets footwear, accessories, apparel, and athletic equipment. It is the global leader of athletic shoes and apparel and sells products in over 170 countries.
In Q4 FY21, Nike, Inc. (NYSE: NKE) reported a net income of $1.5 billion, up from $790 million during the same period last year. The EPS beat the market consensus by $0.42 at $0.93. Recently, Argus hiked its price target on NKE to $182, with a ‘Buy’ rating. In July, KGI Securities initiated its coverage on the NKE stock with an ‘Outperform’ rating.
At the end of Q1 2021, 78 hedge funds tracked by Insider Monkey have positions in Nike, Inc. (NYSE: NKE), worth $5.1 billion. With nearly 8 million shares, worth over $1 billion, Fundsmith LLP is the leading shareholder of the company.
Dynamo Cougar, a Brazilian investment management firm, published its fourth-quarter 2020 investor letter and mentioned Nike, Inc. (NYSE: NKE) and other stocks in it. Here is what it has to say about NKE:
“Nike used to have a very traditional IT infrastructure, which was the starting point for their transformation. Back in 2013 the company had most of their IT in one data center and two distinct IT and software development teams. The infrastructure was organized in a way that all IT solutions, such as Nike.com and Nike apps, were running on the same servers and databases. The result was that any change had to be approved and then deployed with the next release. It was a very manual process, depended on a number of different vendors, and had to be approved by a waterfall process involving both the software and the IT teams. As of 2018, the company has four AWS regions, 150 software engineers, three development locations, and multiple data center locations. In the process, the company decided that they would not just lift and shift their existing applications from their own servers to the public cloud, but instead decided to rethink every single component of their IT organization. The results show that this transformation worked. The organization went from one software deployment every two months to 2.6 deployments per day. Nike went from 90% manual software testing to 100% automated testing, which freed up a lot of developer time. They managed to reduce the time to make small changes on the website and apps from 3 hours to 5 seconds, which means they could react to sports and similar live events. In the past it took more than six months to add a new experience to their digital services, and today it takes one day. In the past they would have a 3-month lead time for new hardware and today they can scale and deploy without any lead time.5 The IT infrastructure now supports 50+ commerce countries versus 6 in 2012, supports 25 languages versus 7, and enables the e-commerce site to access the inventory of 500+ retail stores.
The early move to the cloud and the willingness to adapt to the new environment also allowed Nike to benefit from some significant learnings. For instance, the company first used the Cassandra database when they moved to the cloud. However, due to many technical limitations, it would not allow them to scale for peak demand. Peak demand was becoming a big problem because the Nike SNKRS App would launch products with very limited availability, which meant that millions of people would access the app at the same time. Nike then decided to move to the AWS DynamoDB database (a platform offering), which allowed them to scale up prior to these launches, and thereby spend 98% less than with Cassandra, while offering the same service. In addition, they managed to monitor the launches in real time, which allowed them to react to problems and error messages within seconds. The vast amount of data that is generated within this very short period is now analyzed with machine learning techniques to improve the stability, reliability, and optimization of future launches. The company is working on a number of other efforts that benefit from the cloud environment, such as the implementation of RFID whose data output is managed through the AWS IoT offering…” (Click here to see the full text)
