Madison Funds Expects Further Revenue Growth in NIKE (NKE)

Madison Funds, managed by Madison Asset Management, LLC, released its “Madison Investors Fund” second quarter 2022 investor letter. A copy of the same can be downloaded here. During the quarter, the fund (Class Y) declined 11.8% compared to a return of -16.1% for the S&P 500 Index. The information technology sector is the fund’s leading quarterly performance contributor. In addition, you can check the top 5 holdings of the fund to learn about its best picks in 2022.

Madison Funds discussed stocks like NIKE, Inc. (NYSE:NKE) in the second quarter investor letter. Headquartered in Beaverton, Oregon, NIKE, Inc. (NYSE:NKE) is a sportswear company that engages in the design, development marketing, and distribution of footwear, apparel, and other accessories. On September 21, 2022, NIKE, Inc. (NYSE:NKE) stock closed at $99.79 per share. One-month return of NIKE, Inc. (NYSE:NKE) was -10.43% and its shares lost 36.62% of their value over the last 52 weeks. NIKE, Inc. (NYSE:NKE) has a market capitalization of $156.527 billion.

Here is what Madison Funds specifically said about NIKE, Inc. (NYSE:NKE) in its Q2 2022 investor letter:

“NIKE, Inc. (NYSE:NKE) is the largest seller of athletic footwear and apparel in the world. Started from humble beginnings as Phil Knight’s “crazy idea” in a Stanford entrepreneurship class, Nike marked its 50th anniversary this year. By remaining true to its innovative culture, the brand is as strong as ever and continues to generate attractive growth, soon to surpass $50 billion in annual revenue. In addition to the continuous investments in brand innovation and marketing, over the last few years Nike has invested heavily to lay the foundation for multi-channel commerce. Today, Nike generates approximately 40% of its revenues through its online channel and branded storefronts. Empowered by CEO John Donahoe’s “Nike Consumer Direct Offense,” Nike’s ongoing investments are expected to further drive their overall revenue mix towards the direct-to-consumer channel which we estimate will result in substantial margin improvement over the next three to five years.

While Nike’s business in China, which accounts for approximately 20% of revenue, is experiencing challenges today, our due diligence suggests that consumer preference for the Nike brand outside the U.S. remains incredibly strong. Overall, we expect Nike’s broader ecosystem, often referred to as the Nike Marketplace, to continue to leverage the company’s innovation and premier brand to build direct consumer relationships which deepen Nike’s competitive moat and enhance its financial profile. Turbulence in the Chinese market and concerns over consumer spending in the US and Europe enabled us to initiate a position in Nike at an attractive discount to our appraisal of the company’s long-term value.”

NIKE, Inc. (NYSE:NKE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 72 hedge fund portfolios held NIKE, Inc. (NYSE:NKE) at the end of the second quarter which was 67 in the previous quarter.

We discussed NIKE, Inc. (NYSE:NKE) in another article and shared the list of blue-chip stocks to buy according to billionaire George Soros. In addition, please check out our hedge fund investor letters Q2 2022 page for more investor letters from hedge funds and other leading investors.

Disclosure: None. This article is originally published at Insider Monkey.