The main critic of RiverPark Funds in the third quarter: Nike Inc. (NKE)


RiverPark Funds, an investment management company, has released its Q3 2022 “RiverPark Large Growth Fund” Investor Letter – a copy of which can be downloaded here. For the quarter, the RiverPark Large Growth Fund (the “Fund”) lost 3.3% – slightly better than the S&P 500 (-4.9% for the quarter) and roughly in line with the Russell Index 1000 Growth (-3.6% for the quarter). Try taking the time to check out the fund’s top 5 holdings to get an idea of ​​their top stock picks in 2022.

In its letter to investors for the third quarter of 2022, Leaven Partners mentioned NIKE, Inc. (NYSE:NKE) and explained his ideas for the company. Founded in 1964, NIKE, Inc. (NYSE: NKE) is a Beaverton, Oregon-based footwear manufacturing company with a market capitalization of $143.5 billion. NIKE, Inc. (NYSE: NKE) has returned -44.97% year-to-date, while its 12-month returns are down -44.00%. The stock closed at $91.72 per share on October 25, 2022.

Here’s what Leaven Partners has to say about NIKE, Inc. (NYSE: NKE) in its Q3 2022 Letter to Investors:

Nike: NKE shares were a major detractor this quarter due to higher inventory balances leading to lower than expected gross margins for the next two quarters. The company reported higher sales and EPS in 1Q23, but freight costs, markdowns and the strong dollar weighed on gross margins. Nike continues to expect low double-digit, currency-neutral sales growth, but the strong dollar will reduce overall sales growth and reduced inventory will further reduce gross margins for the year.

Nike is, by far, the world’s largest athletic footwear, apparel and equipment company with over $46 billion in revenue, $6 billion in annual free cash flow in 2021 and over $4 billion in dollars of excess cash. After resolving its currency and gross margin issues in the near term, we expect the company to return to management’s guidance of at least 10% annual revenue growth and return to accelerating growth. of its profits, because in the longer term, we expect margins to be considerably helped by the increase in average selling prices (due to both an increase in prices and a change in the range towards more high-end), the company’s deep innovation pipeline, a centuries-old shift from the company’s traditional wholesale channels to a more direct-to-consumer approach (now 35% of revenue versus 16% a decade ago years), and a more streamlined supply chain. We believe that the global secular growth trend in favor of sportswear will continue to contribute to Nike’s top line growth, while we expect the combined gross margin and operating margin improvements resulting from its initiatives will result in long-term mid-teen growth or higher annual BPA growth for the foreseeable future.”

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Our calculations show that NIKE, Inc. (NYSE:NKE) fell short and did not make our list of 30 most popular stocks among hedge funds. NIKE, Inc. (NYSE:NKE) was in 72 hedge fund portfolios at the end of the second quarter of 2022, compared to 67 funds in the previous quarter. NIKE, Inc. (NYSE: NKE) has returned -12.81% over the past 3 months.

In October 2022, we also shared another hedge fund’s perspective on NIKE, Inc. (NYSE: NKE) in another article. You can find other letters from hedge fund investors and leading investors on our letters to hedge fund investors 2022 Q3 page.

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Disclosure: none. This article originally appeared on Insider Monkey.


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