Bell Global Equities Fund exits Nike as Middle East-driven inflation worries cloud earnings outlook

Bell Asset Management said it sold its Nike stake during March, pointing to a sudden jump in macro uncertainty tied to the Middle East conflict and the inflation pressures it triggered. The move was described in Bell Global Equities Fund’s Q1 2026 materials, which also framed March as a period of sharp, broad equity sell-offs driven more by sentiment than by company-specific deterioration.

The fund said the conflict escalation acted as a catalyst for heightened volatility across global markets. In March, Bell Global Equities Fund (Wholesale class) fell 3.1%, compared with a 2.5% drop for its MSCI World ex Australia benchmark. Bell attributed the fund’s relative underperformance in part to its structural underweight to Energy, along with weaker stock selection across several sectors, including Communication Services, Health Care, and Energy. It later described a tentative ceasefire in early April as helping stabilize sentiment and reverse some of the March declines.

Against that backdrop, Bell said it viewed its Nike position as a turnaround bet that had been gaining traction late last year. The firm said it initiated the stake as confidence grew that inventories were being brought under control, that tariffs were being incorporated into margin expectations, and that the “important US business” had delivered a second consecutive quarter of accelerating growth in Nike’s wholesale channel. Nike’s wholesale channel refers to sales through partners such as sporting goods retailers, rather than through Nike-owned stores and digital platforms.

Bell then said it exited Nike during March ahead of what it referred to as the company’s latest earnings release. In the fund’s letter, Bell attributed the decision to increasing risks to the recovery after escalation in the Middle East and associated inflationary pressures, saying it feared a softer earnings print. The firm did not give details on how large the Nike position was, when in March the sale occurred, or whether it exited fully or reduced exposure in stages.

Nike’s most recent reporting around that period came with its fiscal 2026 third-quarter results released March 31, 2026. In that quarter, Nike reported third-quarter revenues of $11.3 billion, flat on a reported basis, while wholesale revenues rose to $6.5 billion (up 5% reported). Nike Direct revenues, which includes owned stores and digital sales, declined to $4.5 billion. Nike also reported gross margin falling 130 basis points to 40.2%, which the company linked to higher tariffs in North America, and it said inventories totaled $7.5 billion, down 1%.

Bell’s letter also argued that recent market weakness was being driven by narrative-driven selling, including an “AI disruption” theme, which it said extended beyond software into adjacent sectors. The firm said it believed the treatment of stocks with perceived AI exposure had been “indiscriminate,” and it described the resulting pullbacks as creating an opportunity set even as it acknowledged that shorter-term returns had been hit.

What remains unclear is whether Bell’s Nike exit reflected skepticism about the pace of Nike’s specific turnaround actions, or whether it was primarily a risk-management response to macro conditions. Bell did not provide a detailed estimate of how it expected inflation pressures to flow through Nike’s cost structure and demand, nor did it disclose any internal target price, valuation trigger, or scenario analysis behind the decision.