Hit Sell.
I did, back in March 2024.
But let’s look at the whole story.
Nike
Nike is an American icon. It’s not just a footwear maker or an apparel company, it is imbedded in our culture. Sports heroes like Michael Jordan and Tiger Woods wore Nike.
I remember talking with high school kids who would buy the latest Nike shoes, wear them very carefully and then try and sell them for a profit on ebay.
Nike was big. Just Do It!
I bought my first Nike shares in 2012. There was so much to love about the business.
Phil Knight
I read the Phil Knight autobiography Shoe Dog a few years back.
It’s a terrific story and an easy read. I think it’s the best business book I’ve read.
Reading this made me go out an buy a few more Nike shares.
…And Then
It’s usually not immediately obvious when a company loses its way.
Usually, it starts with bringing in fresh new leadership or trying a new strategy. We’re optimistic at first. Then trouble appears. It’s explained away, then more trouble.
It’s a slow process and if we’re not paying close attention, we can get into a rut where we keep thinking we’re almost there.
This is when I like to look back at my original thesis. Why did I invest in the first place? Do these reasons still hold true?
Nike had a new CEO who came from ebay. His mission was to convert Nike to a direct-to-consumer model instead of having to share profits with sellers like Dick’s Sporting Goods and Footlocker (who are now the same company, btw)
Perhaps there’s something about being able to run out and buy a pair, or being able to see them in the store window, touch them, feel them, try them on, and then needing to have them. I don’t know, but the mystique seemed to be gone.
Nike also lost a few key athletes. If Tiger isn’t wearing Nike anymore, do I still have to have it?
It wasn’t one big thing, it was a slowly developing feeling that this wasn’t the same company.
Do I?
But it’s Nike. The name continues to place at the top of the world-wide most recognizable brands list. Just ask Grok.
And on top of that, Nike had had a pretty solid run.
Sure it had pulled back from its highs, but it’s Nike.
I debated quite a bit. Then I sold some. Then I sold it all. I had to admit that it wasn’t the same company in which I had initially invested.
Though I had a feeling I might regret it.
Next
So, I continued to watch a company I loved and waited.
They tossed out the ebay guy and they brought back a retired executive to bring the company back to its roots. I remained on the sidelines, but I hoped for a rebound.
We got a small tick up and some optimism during the honeymoon period, but that appears to be over.
Nike has dropped all the way to $46 per share after hitting over $156 per share just a few years back.
I got out in the $90 per share range. So I didn’t catch the peak, but didn’t get clobbered either.
Wrap Up
Making the decision to sell shares of a company is hard. Especially if we are committed to the company and believe strongly.
And it’s also easy to get caught up on the new story-line.
New leadership is here. They’re going to modernize the company. Yay!
And often new leadership does bring success. New leadership alone is not a sign to sell.
But, when change comes, it’s important to refresh our thesis. Don’t forget why we bought originally. Make note of what’s changed? Are we still optimistic? What do we expect to see? How long should it take?
Management should be able to give us these answers. If they can’t that’s a problem.
And sometimes we get the answers, but the plan is revised with each quarterly miss.
I’m glad I sold my Nike shares. I remain optimistic and hope for a turn-around, but I won’t invest. At least not now.