Tim Cook joined Apple as it was beginning a major turnaround in the late 1990s.
He sees another major turnaround opportunity for a major American brand, and recently doubled his position.
The turnaround may take time, but there is significant upside from here if it can succeed.
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Tim Cook has consistently shown that he knows how to make smart financial decisions with tremendous upside and limited downside. This was exemplified all the way back in 1998, when he decided to leave a comfortable position at the world’s largest computer manufacturer, Compaq, and take a job at a struggling competitor, Apple Computer. He continued to make smart decisions on Apple(NASDAQ: AAPL)and was instrumental in the growth of the company to become one of the most valuable in the world.
Suffice to say, Cook knows a good turnaround opportunity when he sees one. And that’s why he invested $3 million from his personal portfolio in another company with which he has deep ties, thus doubling his stake in the business. While recent struggles have sent the stock down, the company has several key characteristics that Cook can identify with and should support a successful turnaround.
Here’s why Cook just doubled down Nike(NYSE: NE).
Image source: Getty Images.
Former CEO John Donahoe led Nike down the wrong path during his tenure. He pulled out of major wholesale partnerships to focus on direct-to-consumer sales and fell back on major lifestyle franchises instead of investing in marketing new innovative products. The result was weakened financial performance during his tenure which eventually led to his dismissal and former exec Elliott Hill replacing him, as appointed by the board of directors (of which Cook is a member).
Hill took the reins in late 2024 and began implementing his turnaround plan. The “Win Now” strategy focuses on product innovation, marketing a distinctive brand with key athlete partnerships, increasing wholesale distribution, and reducing inventory levels for undifferentiated products.
The turnaround depends on the company’s ability to innovate on athletic apparel and leverage its brand equity. Those are two features Cook is very familiar with as Apple follows a similar playbook in personal computing.
So far, Hill doesn’t have much to show for his efforts. Second-quarter revenue rose 1% year over year, as weakness in China dragged down results. Sales in Greater China fell 17% and earnings before interest and taxes (EBIT) fell 35% year-on-year. This is especially discouraging considering that China is one of the largest and fastest growing sportswear markets in the world. During the earnings call, Hill noted that there is a lot of work to be done to adapt its approach to the region, but it remains a great opportunity.
Overall, Hill said, “We’re in the middle innings of our comeback.” While it has faced some setbacks, including expensive tariffs imposed in 2025, there is a clear path to return to revenue growth and margin expansion. Hill said it will take some time, but “we will see the path back to double-digit EBIT margins.”
But many investors are losing confidence. Shares fell 10% after the earnings release as they feared the turnaround was taking longer than anticipated and profitability would remain under pressure for longer. That’s when Cook saw the opportunity to buy shares, adding 50,000 shares for an average price of $58.97, according to the SEC filing. That’s a big vote of confidence that change is taking shape as Hill expects.
With profits dwindling, Nike stock may not seem like a great value today based on its near-term outlook. However, if it properly leverages its brand strength to boost sales through wholesale channels with innovative new products, earnings could quickly surpass previous highs before the end of the decade.
This will come through a combination of modest revenue growth and strong margin expansion. But this will take some time. Fiscal 2026 earnings results will be weighed down by its ongoing turnaround efforts and charges, along with weakness in Greater China. Management warned of continued margin pressure through fiscal 2026.
In the medium term, however, the company should be able to overcome those challenges and produce positive results on both the top and bottom lines. A return to double-digit EBIT margins would provide a roughly 50% boost to profitability from the current fiscal year without any revenue growth (based on the minimum definition of “double digits”).
As a seasoned insider and CEO who has overseen major turnarounds before, Cook has valuable insight into how well Nike’s turnaround is going. His investment is a sign that he is doing better than others are giving him credit for. And if successful, the stock looks like a bargain at the current price, close to where Cook added to his position.
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Adam Levy holds positions in Apple. The Motley Fool has positions in and recommends Apple and Nike. The Motley Fool has a disclosure policy.
Apple CEO Tim Cook Just Doubled Down on This Iconic Value Stock in His Personal Portfolio With a Fresh $3 Million Investment was originally published by The Motley Fool
