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Holly LaFon
Holly LaFon
Articles (8606)  | Author's Website |

Ackman Buys Nike

Also acquires more Mondelez

February 15, 2018 | About:

Bill Ackman (Trades, Portfolio) reported Wednesday that he made only one new buy, Nike Inc., and increased his holding of Mondelez International Inc. (NASDAQ:MDLZ) in the fourth quarter.

The leader of the hedge fund Pershing Square acquired 5,836,020 Nike shares, which had a fourth-quarter average price of $57. The price has since gained 18% as of Wednesday evening.

The holding represents 6.2% of his portfolio, which makes it his smallest position, below Platform Specialty Products (NYSE:PAH). Ackman did not have to report the holding during the quarter because he purchased 0.36% of Nike’s shares, under the 5% of shares an investor must own to trigger a disclosure. As an activist investor, typically Ackman takes sizable stakes in large companies as leverage to push for change.

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The disclosure contributed to a 3.27% pop in Nike’s share price Wednesday, which closed the day at $67.96 per share, near a 10-year high.

Over the past five years, Nike has exhibited 10.4% annualized revenue growth, 12.3% EBITDA growth and 6.2% book value growth. Over the same period, its stock price rose 138%.

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The athletic company looks relatively pricey by its price-sales ratio, which hit 3.18, near a two-year high.

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Ackman also increased his holding of Mondelez International, a snack food company, in the fourth quarter by 66.98%, purchasing 9,328,299 additional shares. To end the quarter, he had amassed 23,256,402 shares, raising the position to third from fourth place in his portfolio.

Ackman said of the company in a third-quarter letter: “We believe that Mondelez (NASDAQ:MDLZ) is currently substantially undervalued given its high business quality, long-term secular growth potential – especially in emerging markets – and substantial opportunity to improve profit margins. Today, Mondelez trades at 17 times our estimate for 2018 earnings per share, a discount to the S&P 500 market multiple, for a business whose attributes are substantially better than the average company in the S&P 500.”

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Mondelez has a $65.2 billion market cap. It has seen decline rates of 3.8% for revenue, 10.4% for free cash flow and 0.2% for book value in the past five years. EBITDA grew at a rate of 1.7% over the same period.

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See Bill Ackman's portfolio here

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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