We all know about the Nike ‘Olympic Trade.’ Furthermore, we think that once ‘seasonal trade’ gets to a point where it is so widely known, it should probably cease to exist. But the reality is that it still tends to come and go like clockwork.
That is, until this year. As of today, NKE underperformed the S&P YTD by 2 points (NKE +3%, SP500 +5%). But looking through history, NKE outperformed the S&P500 by an average of ~18% in 9 out of the 10 recent Olympic event years. The only time the trade did not work was in Nagano, Japan, showing how much more important this trend is for Summer Olympics vs. Winter.
Most interesting to us is that the opportunity continues for 6-months after the event as well. Over the past three Summer Games, we’re looking at about a ~13% move vs. the S&P during the window following the event.
After going through this analysis, it suggests to us that ‘The Nike Olympic Trade’ is far less consensus than we’d otherwise have thought.