Pershing Square Cashes Out of Nike Stake, Sources Say -- Update
March 22 2018 - 2:12PM
Dow Jones News
By David Benoit
William Ackman's Pershing Square Capital Management LP cashed
out of its brief holding in Nike Inc. in recent weeks, for a profit
of around $100 million.
The activist had taken the stake in the fourth quarter, it
disclosed in January, but Pershing Square intended to keep it as a
passive bet on a company it believed was undervalued. After the
stock jumped some 32% from Pershing Square's purchasing costs, it
sold the stake, people familiar with the matter said.
Pershing Square had owned about 5.8 million shares at the end of
2017, it had disclosed, which would mean the bet scored about $100
million in profits. The exact size couldn't be determined given the
potential for other trading that wasn't disclosed.
This year is critical for Pershing Square and Mr. Ackman. As a
result of bad bets on companies including Valeant Pharmaceuticals
International Inc. and Herbalife Ltd., the firm has suffered three
straight years of declines that have spurred investor withdrawals
and dragged down assets. It needs wins to convince remaining
investors to hang around. The publicly traded Pershing Square
Holdings Ltd., which closely tracks his private funds, had lost
6.2% this year through Tuesday with bets on Fannie Mae and Freddie
Mac, Mondelez International Inc. and Automatic Data Processing Inc.
all in the red.
For Nike, the exit alleviates at least one potential pressure
point on a management team juggling several issues. The company has
faced continuing challenges in its home market in North America as
consumer shopping habits change and more people shop online, and
Nike has worked to expand its digital and direct sales.
Last week, two prominent executives, including the heir-apparent
to be CEO, left their positions in the wake of an internal probe
into inappropriate behavior at Nike. Trevor Edwards, Nike's brand
president, resigned his post and intends to retire from the company
in August. Jayme Martin, a vice president, was forced out, The Wall
Street Journal reported.
Nike is due to report quarterly results after market close on
Thursday. Analysts polled by FactSet expect net income of $868
million on sales of $8.9 billion for the period ended in February,
compared with $1.1 billion and $8.4 billion, respectively, a year
ago.
Sara Germano contributed to this article.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
March 22, 2018 13:57 ET (17:57 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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