Mar Vista Investment Partners, LLC, an investment management company, released the “Strategic Growth Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The U.S. stock market had another successful time in the third quarter of 2024, with the S&P 500® Index growing for the fourth consecutive quarter, which hasn’t happened since Q4 2021. This year’s first three quarters have seen the best performance for the S&P 500® Index since 1997. However, it was still slightly below the remarkable start of 2023. In the third quarter, the strategy returned +5.49% net-of-fees compared to +3.19% and +5.89% returns for the Russell 1000 Growth Index and the S&P 500 Index. With interest rates that are not exceptionally high by historical standards, the market seems to be starting an easing cycle, which could encourage additional increases. Kindly check the top 5 stocks of the strategy to know its best picks in 2024.
Mar Vista Strategic Growth Strategy highlighted stocks like NIKE, Inc. (NYSE:NKE), in the third quarter 2024 investor letter. NIKE, Inc. (NYSE:NKE) designs, develops, and markets athletic footwear, apparel, equipment, and accessories. The one-month return of NIKE, Inc. (NYSE:NKE) was 1.42%, and its shares lost 31.47% of their value over the last 52 weeks. On November 11, 2024, NIKE, Inc. (NYSE:NKE) stock closed at $79.09 per share with a market capitalization of $117.725 billion.
Mar Vista Strategic Growth Strategy stated the following regarding NIKE, Inc. (NYSE:NKE) in its Q3 2024 investor letter:
“We exited our NIKE, Inc. (NYSE:NKE) investment following an 18% stock price recovery from recent lows. This decision was prompted by Nike’s revised fiscal year 2025 forecast, which projects negative mid-single-digit revenue growth. The company faces a significant slowdown in lifestyle product sales, expected to persist for at least another year. Our analysis indicates sales and earnings will likely fall 15-20% below management’s previous conservative estimates. This downward revision stems from insufficient product innovation, wholesale channel shifts, and intentional supply reduction in lifestyle franchises. While reduced guidance and new leadership might provide a catalyst for the stock’s performance, the path to fundamental improvement is still unclear.
Despite maintaining its position as the global sportswear leader, Nike’s intrinsic value has stagnated. The company’s efforts to reinvigorate innovation and re-engage with wholesale channels may eventually yield growth, but our skepticism regarding management’s execution has increased. We believe Nike needs to reset investors’ expectations on margins and profits while revitalizing its top-line prospects. A short-term profit sacrifice, though painful, could provide the necessary reset to achieve financial expectations in future years. We will continue monitoring Nike’s turnaround and reassess the investment if fundamentals and management execution improve.”
A team of trainers and athletes displaying a wide range of athletic and casual footwear.
NIKE, Inc. (NYSE:NKE) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 75 hedge fund portfolios held NIKE, Inc. (NYSE:NKE) at the end of the third quarter which was 66 in the previous quarter. In the fiscal first quarter of 2025, NIKE, Inc.’s (NYSE:NKE) revenue declined 10% on a reported basis and 9% on a currency neutral basis. While we acknowledge the potential of NIKE, Inc. (NYSE:NKE) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed NIKE, Inc. (NYSE:NKE) and shared the list of stocks that are close to becoming dividend aristocrats. Polen Focus Growth Strategy exited its position in NIKE, Inc. (NYSE:NKE) during Q3 2024, due to its underperformance. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.