Nike, Inc. (NYSE:NKE) has announced its fiscal fourth quarter 2015 financial results, easily beating the market’s earnings estimate of $0.73 by posting earnings per share of $0.98. It has been an excellent quarter for the footwear, sports, and apparel company, as its quarterly revenues improved 5% year-over-year to $7.78 billion, $90 million higher than the market’s expectations. Nike reported 10% growth in its fiscal revenue for fiscal year 2015 as well, as its annual revenue for the 12 months ending May 31, 2015 was $30.60 billion against fiscal year 2014’s revenue of $27.80 billion. During the fiscal fourth quarter, Nike reported gross margins of 46.2% with a growth of 60-basis points primarily because of higher selling prices for its products. The earnings appear to have caught the market somewhat off-guard, as Nike traded down by nearly 1% today amid rumblings that it would miss estimates and that headwinds for the company would become apparent upon the release of this afternoon’s earnings report. That appears not to be the case, and shares have already flourished in after-market trading, gaining over 2%.
NIKE, Inc. (NYSE:NKE) investors should be aware of an increase in enthusiasm from smart money lately. The sports footwear manufacturer attracted investments from 56 hedge fund managers in the first quarter of 2015 with net investments worth $2.94 billion. The hedge fund sentiment is positive, as Nike witnessed an increase in net investments from $2.60 billion and in total ownership from 55 hedge fund positions at the end of 2014. There has been high insider activity for the sports brand, with Jeanne P. Jackson, President of the Product & Merchandising unit, making multiple sales transactions, including the sale of 20,000 shares each on both February 20 and May 5. Don Blair, EVP and CFO, made the largest sales transactions in the last six months by selling 50,000 shares each on both March 9 and March 20.
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their top small-cap picks are much more profitable than both their large-cap stocks and the broader market as a whole. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests, which were conducted over the period of 1999 to 2012. Moreover, since the beginning of forward testing from August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 144% over the last 32 months, which is more than 84 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
So, let’s go over the fresh hedge fund action surrounding NIKE, Inc. (NYSE:NKE).
Hedge fund activity in NIKE, Inc. (NYSE:NKE)
Heading into the second quarter, a total of 56 of the hedge funds tracked by Insider Monkey were bullish in this stock, a change of 2% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings substantially.
Of the funds tracked by Insider Monkey, Lansdowne Partners, managed by Alex Snow, holds the most valuable position in NIKE, Inc. (NYSE:NKE). Lansdowne Partners has an $880 million position in the stock, comprising 7.9% of its 13F portfolio. On Lansdowne Partners’ heels is Stephen Mandel of Lone Pine Capital with a $569.7 million position; 2.2% of its 13F portfolio being allocated towards the stock. Other members of the smart money with similar optimism include Alexander Mitchell’s Scopus Asset Management, David Blood and Al Gore’s Generation Investment Management, and Mark Wolfson and Jamie Alexander’s Jasper Ridge Partners.
Now, specific money managers were breaking ground themselves. Mandel’s aforementioned position was the most valuable on established in NIKE, Inc. (NYSE:NKE) during the quarter. Jason Karp‘s Tourbillon Capital Partners also initiated a $45.1 million position during the quarter. Other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Positive hedge fund activity and growth in the yearly revenue of Nike is an excellent indicator for investors, as is the 2% rise in global futures orders, leading us to suggest a buy of this stock.
Disclosure: None
