Pershing Square sold stock after a 32% rise; activist needs a gain to hold on to investors

By David Benoit 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (March 23, 2018).

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 23, 2018 02:47 ET (06:47 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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