In the 90s, Warren praised Phil Knight as a “terrific operator” when he was still CEO and the company has continued to do phenomenally well (all things considered) throughout subsequent leadership changes. At this time, Warren had made his infamous investment into Dexter Shoe which has gone down as one of his worst trades.
When asked one time about Nike during a shareholder meeting, he said he “[doesn't] understand the competitive advantage of the business”, but that he does (ironically) understand the competitive advantage of Dexter Shoe. Berkshire Hathaway ($BRK.A) does own sportswear and sporting good companies like Spalding and Russell Athletic which he's admitted aren't great businesses. During the shareholder meeting where he praised Phil Knight, he said “In terms of what we think of the stock, we keep all of those views to ourselves pretty much”. Meanwhile, it's up thousands of percent since then.
Nike has continued to be the standard in sportswear throughout decades. Even when tiny incumbents like Hoka One One or On Running ($ONON) come along to take smaller pieces of the pie, they typically fizzle out and Nike remains king – case and point: Under Armour ($UAA). This is common with disruption-proof premium apparel manufacturers who are the standard of their (non-niche) category like how Hermès (EPA: $RMS) dominates handbags and Louis Vuitton ($LVMUY) dominates luggage.
Warren has stressed the importance of brand as a moat countless times like in his Snickers example. Many of Berkshire's most iconic investments like Coca-Cola and Apple are examples of companies where the strong brand is critical to the moat. Nike is one of the gold standards of this, but Buffett talks about the stock as if it's a dog.
Why do you think Warren has been allergic to this stock for decades?
*Can't link the YouTube videos with the sources unfortunately because r/stocks mods don't allow links to YouTube.
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