Dear Investment Team,

Hello Team, I am writing to discuss an investment opportunity. The company is Nike (NKE). They are currently trading at a 10 year low and 75% off their 5 year high. There cash flows are dwindleing and they have spent 1 billion dollars in each of their last two years to make ends meet. They have 6.5 billion dollars left in cash and cash equivalents so I give them 5 years before they are bankrupt. Furthermore they carry a debt to equity of 80%, which is high and their eps has dropped steadily over the last 5 years (Peaking strangely in 2024). However, they have consistently been beating their earnings estimate over the last year which shows me that management is on top of things. With inflation on the rise and salaries stagnant people are going to have to chose between food and rent or a new pair of nikes and nike prices will only go up... Or will they, it is possible that Nike lowers their prices to meet dwindleing demand or focuses on shoes that are easier to produce. In any case they have a moat - a big moat - this is a coka-cola sized moat and if Berkshire didn't already own Brooks they'd be in the market.
On second glance of their financials I see that their debt payments are 40% of their income, and their income has dropped steadily at 55% over 5 years - thats -9.2% annually while total debt has decreased 10% over the same 5 year period. This enforces my 5 year prediction of bankrupcy - maximum 7. But let's wait for dividend cuts first, that should happen sometime in the next three years. Currently, debt payments plus dividends are 3.4 billion dollars and their after tax income is 2.5 billion. It just doesn't look healthy! But they have pricing power and a moat, a beautiful moat. So let's hope they continue this trend and take them over. No Joke!

Fun Fact: in 2009 Nike's debt to equity was 5% now its 80% furthermore, it has only grown it's equity by 52% since then (2.5%/year)

Sincerely,

King Arthur Henry George of Britain

April 1, 2026

Note: I just looked at Adidas and they are smoking, not only are earnings up this year and last but their financing cash flows are well covered by their after tax income. They currently pay a 2% dividend and have an, enterprise value/EBITDA, of 8.92 (Nike was 21) I know that 5 is perfect for value investors. They are trading at a 10 year low, off 50% from their 5 year high. I think there is money to be made in Adidas especially if Nike goes under.