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Raj K
Posted: 30 December 2024 18:17:27(UTC)
#577

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Newbie;329692 wrote:
Nike does strike me as a bit odd - especially when their turnaround strategy is to follow the leaders and try to catch up with offerings where they have fallen behind. This not only suggests lack of innovation but also implies that Nike do not have a viable way to get ahead.

However Ackman does have a knack to find companies and make them work with a good degree of conviction (ignoring the Netflix issue where he bailed out instead of sticking to his conviction and in turn making a loss on one of the star performers).


Free Cash Flow

2020 1,399.00
2021 5,962.00
2022 4,430.00
2023 4,872.00
2024 6,617.00

If we ignore the big jump during the covid year and next , Nike has increased its Free Cash Flow. Is starting yield is higher than the current long term risk free rates. Ackman must expect the company to carry on growing this FCF once issues are sorted out, well into the future, for it make sense as an invesment. We will have to leave it them.
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Newbie on 30/12/2024(UTC), Rookie Investor on 30/12/2024(UTC), Auric on 30/12/2024(UTC), Old Jock on 31/12/2024(UTC)
Rookie Investor
Posted: 30 December 2024 20:56:32(UTC)
#578

Joined: 09/12/2020(UTC)
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Raj K;329697 wrote:
Newbie;329692 wrote:
Nike does strike me as a bit odd - especially when their turnaround strategy is to follow the leaders and try to catch up with offerings where they have fallen behind. This not only suggests lack of innovation but also implies that Nike do not have a viable way to get ahead.

However Ackman does have a knack to find companies and make them work with a good degree of conviction (ignoring the Netflix issue where he bailed out instead of sticking to his conviction and in turn making a loss on one of the star performers).


Free Cash Flow

2020 1,399.00
2021 5,962.00
2022 4,430.00
2023 4,872.00
2024 6,617.00

If we ignore the big jump during the covid year and next , Nike has increased its Free Cash Flow. Is starting yield is higher than the current long term risk free rates. Ackman must expect the company to carry on growing this FCF once issues are sorted out, well into the future, for it make sense as an invesment. We will have to leave it them.


Nike has good GM at 44%, operating margins around 11%. ROIC very high at 44%.

Seems like a solid quality type business by these metrics. Problem is it does need to grow revenues at a FCF yield of around 5-6%. But recent revenues have declined. Hopefully a change in strategy will see it bring growth back. Maybe Ackman sees something, but I remember Terry Smith selling out and not sure if he is interested again at todays level.

I think there are more competitors now in this space. Their key growth market in China has decent alternatives. Nike will need to differentiate itself from other brands, and not just because it is Nike, to bring about the growth.

I wonder if Ackman (or Terry Smith) is looking at Hershey's. Seems like a type of business they would go for. High ROIC, GM, moat (given its efficiency in production etc). It seems different to Nike in that I do think people stick to certain chocolates or other confectionaries instead of trying other things. whereas with Nike, one can go to the other brands, given there does not seem to be a product differentiation anymore with what I heard Nike shoes being lower quality than they used to.

Hershey's have been hit by the Cocoa price spike, but it looks like production is ramping up. I read though that they will come more under pressure next year due to obvious margin erosion. So might be a good opportunity to buy some as it seems like a long term compounder with many avenues to growth and a strong enough moat to keep competition at bay. Quite different to Nike IMO. Recent Mondalez takeover offer does also evidence Hershey's value. It is controlled by a trust fund though so likely won;t be for the activists like Ackman.
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Raj K on 31/12/2024(UTC)
Big boy
Posted: 31 December 2024 10:22:24(UTC)
#575

Joined: 20/01/2015(UTC)
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Raj K;329696 wrote:
Big boy;329688 wrote:


Thank you for your comments on NIKE..

I found when Managing money that many hundred/thousands stocks for the future was better than say 8 stocks from the passed..

ie better to be in the small up and coming stocks rather than just major conglomerates.........



We are still waiting for the published results, showing your 100's/1000 stock record breaking fund strategy outperformed over multiple cycles... Any chance getting a squizz of that now its nearly 2025 :)

Most wealth has been built by people owning one or a handful of business. I dont expect an indivdual seconday back seat investor to take the same risk however managers like Ackman see stocks as real businesses . There is no way they will buy 25/30/40/100 stocks. That would be diworsification for them. They want to understand the businesses they are invested in and where they can, influence changes in them.

BBOY just teasing i know we will never see the data :)




Having all your eggs in one basket can be very risky (maybe even gambling) and having all your chips on 2/3 Cos is not that simple...Not many will tell you when they loose.

One lesson I always quote is Vodaphone which was near 12% of FTSE100 and regarded as a 'Global Blue Chip". superstar.

Draw a graph of say 3 stocks and compare with say a 1000 stocks. A much smoother movement without the massive dips and peaks ie under and over performance.

Your idea is great in theory but ..........
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Raj K on 31/12/2024(UTC)
Raj K
Posted: 31 December 2024 17:09:38(UTC)
#579

Joined: 22/04/2016(UTC)
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Rookie Investor;329704 wrote:
Raj K;329697 wrote:
Newbie;329692 wrote:
Nike does strike me as a bit odd - especially when their turnaround strategy is to follow the leaders and try to catch up with offerings where they have fallen behind. This not only suggests lack of innovation but also implies that Nike do not have a viable way to get ahead.

However Ackman does have a knack to find companies and make them work with a good degree of conviction (ignoring the Netflix issue where he bailed out instead of sticking to his conviction and in turn making a loss on one of the star performers).


Free Cash Flow

2020 1,399.00
2021 5,962.00
2022 4,430.00
2023 4,872.00
2024 6,617.00

If we ignore the big jump during the covid year and next , Nike has increased its Free Cash Flow. Is starting yield is higher than the current long term risk free rates. Ackman must expect the company to carry on growing this FCF once issues are sorted out, well into the future, for it make sense as an invesment. We will have to leave it them.


Nike has good GM at 44%, operating margins around 11%. ROIC very high at 44%.

Seems like a solid quality type business by these metrics. Problem is it does need to grow revenues at a FCF yield of around 5-6%. But recent revenues have declined. Hopefully a change in strategy will see it bring growth back. Maybe Ackman sees something, but I remember Terry Smith selling out and not sure if he is interested again at todays level.

I think there are more competitors now in this space. Their key growth market in China has decent alternatives. Nike will need to differentiate itself from other brands, and not just because it is Nike, to bring about the growth.

I wonder if Ackman (or Terry Smith) is looking at Hershey's. Seems like a type of business they would go for. High ROIC, GM, moat (given its efficiency in production etc). It seems different to Nike in that I do think people stick to certain chocolates or other confectionaries instead of trying other things. whereas with Nike, one can go to the other brands, given there does not seem to be a product differentiation anymore with what I heard Nike shoes being lower quality than they used to.

Hershey's have been hit by the Cocoa price spike, but it looks like production is ramping up. I read though that they will come more under pressure next year due to obvious margin erosion. So might be a good opportunity to buy some as it seems like a long term compounder with many avenues to growth and a strong enough moat to keep competition at bay. Quite different to Nike IMO. Recent Mondalez takeover offer does also evidence Hershey's value. It is controlled by a trust fund though so likely won;t be for the activists like Ackman.


They (NIKE) are certainly going to have to do something to get back to growth . I understand under the last CEO that they had been adopting a deep discount strategy for their merchandise and revenues were still falling. The recently appointed guy is pulling the plug on that. NIKE got the branding but does it have the innovation and whatever is needed to fight off the competition going forward in these consumer areas.. I have no idea who the new competitors are, im old school and only know ADIDAS. I expect China will have many of their own companies producing hightly innovative stuff too, so i do really hope Ackman and co know what they are doing!

Not studied Hersheys but your arguments are compelling. Will take a look at it in the new year!
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Rookie Investor on 31/12/2024(UTC)
Big boy
Posted: 31 December 2024 17:20:04(UTC)
#580

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You are clear about your views about NIKE which is fine but what in your opinion is the correct SP . To-days SP is $75.5 up from $70

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Raj K
Posted: 31 December 2024 17:47:22(UTC)
#581

Joined: 22/04/2016(UTC)
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Big boy;329782 wrote:
You are clear about your views about NIKE which is fine but what in your opinion is the correct SP . To-days SP is $75.5 up from $70



I’m not following NIKE in enough( detail to work out what its intrinsic value is at this time. Isn’t that what we are paying Ackman and his team to do ? Some commentators I take notice of seem to that’ it has 75% upside over the next four to five years. I don’t know what discount rates ( and any margin of safety, which is unlikely with most of these quality companies). Ackman and co use when working out the buy price for their investments. Maybe we should ask Pershing Square IR… I would hope his calibre of investor is looking for 15% p.a ( before his fees I would assume) .
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Big boy on 01/01/2025(UTC)
Alanis M
Posted: 01 January 2025 02:41:28(UTC)
#582

Joined: 26/02/2018(UTC)
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Ackman is generating a lot of noise about fannie and Freddie on X, there's a lot of press on it.

It looks like he has in the region of 400m worth of stock give or take. Although it's hard to tell given the history of his stake, the price changes etc and the lack of continuing disclosure.

I also understand he might be subject to dilution depending on how any IPO worked.

Subject to all that, on his own thesis (set out in the best detail here https://x.com/BillAckman...tus/1873818034428694837) he could 10x his investment.

Seems very positive. I don't imagine he'd be posting like this if he wasn't highly confident.

Big Boy you asked above why I am not sure about Nike. I am a millennial and I feel the brand has lost its way. I've read conflicting financial analyses and broker recommendations. But I don't know what I am doing. I trust the PSH team to do that for me. And even if Nike is a dog I rate other holdings (including this fannie and Freddie trade).
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Big boy on 01/01/2025(UTC)
Big boy
Posted: 01 January 2025 09:57:29(UTC)
#584

Joined: 20/01/2015(UTC)
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Alanis M;329818 wrote:
Ackman is generating a lot of noise about fannie and Freddie on X, there's a lot of press on it.

It looks like he has in the region of 400m worth of stock give or take. Although it's hard to tell given the history of his stake, the price changes etc and the lack of continuing disclosure.

I also understand he might be subject to dilution depending on how any IPO worked.

Subject to all that, on his own thesis (set out in the best detail here https://x.com/BillAckman...tus/1873818034428694837) he could 10x his investment.

Seems very positive. I don't imagine he'd be posting like this if he wasn't highly confident.

Big Boy you asked above why I am not sure about Nike. I am a millennial and I feel the brand has lost its way. I've read conflicting financial analyses and broker recommendations. But I don't know what I am doing. I trust the PSH team to do that for me. And even if Nike is a dog I rate other holdings (including this fannie and Freddie trade).



Thank you......I have a saying "its not what you buy but when you buy" I suspect this is how PSH operate rather than the Industry norm of buying the "best" to-wards the top of the market...(clearly overvalued) This seems to be the method many Forum Member use.

We have to assume that Mr Ackman believes they are cheap at this level ......

Concern has been given about lack of disclosure and I trust PSH to know what they are doing and clearly they dont want MR&MRS Cherrypicker messing around with SPs ...
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Alanis M on 01/01/2025(UTC), Sheerman on 01/01/2025(UTC)
Newbie
Posted: 01 January 2025 12:44:38(UTC)
#583

Joined: 31/01/2012(UTC)
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Alanis M;329818 wrote:
Ackman is generating a lot of noise about fannie and Freddie on X, there's a lot of press on it.

It looks like he has in the region of 400m worth of stock give or take. Although it's hard to tell given the history of his stake, the price changes etc and the lack of continuing disclosure.

I also understand he might be subject to dilution depending on how any IPO worked.

Subject to all that, on his own thesis (set out in the best detail here https://x.com/BillAckman...tus/1873818034428694837) he could 10x his investment.

Seems very positive. I don't imagine he'd be posting like this if he wasn't highly confident.

Big Boy you asked above why I am not sure about Nike. I am a millennial and I feel the brand has lost its way. I've read conflicting financial analyses and broker recommendations. But I don't know what I am doing. I trust the PSH team to do that for me. And even if Nike is a dog I rate other holdings (including this fannie and Freddie trade).

He admits that in the last decade he has been a bag holder for FM&FM in that the stock is the same as it was a when he bought it over 10 years ago - par

However is post moved the stock 34% upwards in a heartbeat. This is the contentious part, especially when someone like him can move the whole market.

Then again if he posts when he exits the position then all is good but, if he exits quietly by swinging the stock price upwards for his own benefit then that is not on. This is what I suspect what all the commotion is about.

In saying all of that I am holder of PSH in a large slice within my portfolio.
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Big boy on 01/01/2025(UTC), Raj K on 01/01/2025(UTC)
Big boy
Posted: 01 January 2025 15:36:06(UTC)
#585

Joined: 20/01/2015(UTC)
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In the past I never liked giving journalists tips so they would recommend one of my stocks from my published portfolio with no idea when I purchased them or if they were still attractive......but clearly they are good because X holds them.

Say 6 months later they would call and say this stock had not moved. My comment was I sold shortly after you tipped them..... is that my fault and if you helped me out am I gulity of a crime.

Did my Funds benefit from this action maybe but was this my fault..

We have seen many Members behave like Mr & Mrs Cherrypicker and many times they get court.

This is the reason I trust 100% the stocks held by a Manager and I don't need to do DD. .I appreciate many Members have better ability than the Managers and do DD but thats fine with me.

I see Tesla a stock that many love to hate is plus 350% from 12 month low.. I assume Members did their DD and are enjoying the ride...
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