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ven't grown by that much in the last
What does it take to be a successful stock picker in a market where passive investing drives S&P 500 returns that are nearly impossible to best? For $39 billion in assets Orbis Investment Management, it Nike Roshe Run Femme boils down to paranoia.Consider the gauntlet 29-year-old analyst Eric Marais faced when he recommended Nike NKE -0.41% as a turnaround candidate for Orbis’ flagship strategy. Marais’ thesis was that Nike would finally break out of its multiyear slump. Rapper Kanye West's Yeezy-branded shoes were Nike Free Run 3.0 Womens fueling a fashion renaissance at Adidas , and Under Armour UA -1.03% had won over basketball endorsers like Stephen Curry, but all Nike had to show was a string of poor results. Meanwhile, ailing retailers were flooded with its priced-to-sell gear. From Christmas 2015 Nike Air Vapormax Donne to June 2017, Nike plunged 17% as the S&P 500 surged 18%.Marais believed that the solution to these woes was An online direct-to-consumer pivot might be fraught in the short run because it would undermine middlemen like Dick's Sporting Goods DKS -0.24%. But in the Nike Roshe Run Womens long run it would put Nike back in charge of its brand, pushing margins to 50%. Online sales, Marais predicted, plus Nike's new VaporMax and Flyknit shoes, would be the linchpin of a turnaround. Orbis could get in at a bargain not involve client money, yet they’re studied Nike Air Max 2017 Womens to assess skills, Nike Air Max 2017 Womens traits and biases.

From the minute Marais started his pitch, in a claustrophobic conference room with the shades drawn on the 38th floor of the Transamerica Pyramid overlooking San Francisco Bay, he was bombarded by colleagues tearing apart his thesis. “I don't know Nike Air Max 90 Mujer Rosas that the new shoes look cool,” said one analyst. “How do you grow your e-commerce business by more than three times?” barked another, challenging Marais’ forecast of $7 billion in online sales by 2020. “They haven't grown by that much in the last two years.” One analyst Adidas NMD Donne even built an argument to short Nike.Before the presentation, more analysts were in favor of buying Nike than not; afterward, most were opposed. “We're expecting a lot without much evidence,” said one portfolio manager. Another said, “It's entirely possible [management] will talk Nike Air Zoom Spiridon Womens down the e-commerce margins and then we'll be sitting on a fashion-cycle thesis.”Marais’ Nike pitch turned into a 75-minute interrogation, with 17 colleagues, some as far away as London and Bermuda, challenging him via videoconference. But Marais held his ground. “Ultimately it will be  good for Nike if it moves more sales online,” he said. “The tendency is for investors to extrapolate the recent past, and Adidas has been really strong for a number of years.… It's unlikely that kind of fashion cycle will continue.”

Believe it or not, within days Orbis  began building a $500 million position in Nike, which was then trading in the low $50s. Why? Because contrarian value investing dictates that heavy skepticism and a wide-eyed approach to potential risks are prerequisites for making outsize returns in big, concentrated positions.When Nike Air Max 95 Womens Nike reported strong earnings weeks later, it told giddy shareholders, “Fulfilling Nike Air Max 2017 Womens demand through generates nearly twice the revenue and significantly higher margins on each transaction. And, over time, we see the growth of digital as accretive to Nike's bottom line.” Last quarter, Nike Free Run 2.0 Womens sales rose 18%, and growth is accelerating in North America. The stock now trades at $66, meaning Orbis’ position is up about 25%.“I love when the bear thesis is the bull thesis,” says Adam Karr, 46, managing director in charge of Orbis’ U.S. investment team Nike Air Force 1 Femme in San Francisco and portfolio manager of its Global Equity strategy.

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