Nike CEO's retirement, AI-powered ETF: Asking for a Trend

On today's episode of Asking for a Trend, Host Josh Lipton breaks down some of the biggest stories from the trading day.

A big C-suite shake-up is coming to Nike (NKE) as CEO John Donahoe announced his retirement. He will be replaced by former Nike executive Elliott Hill, effective October 14. Bernstein senior analyst Aneesha Sherman likes the move, arguing it's good news for the stock for two reasons: Hill will be the new CEO and the announcement's timing. She notes that Hill has a long history at Nike, especially with the product, and appears to be well-liked at the company.

"This is not only the right skill set in terms of understanding product and understanding Nike. I think he will be the right leader in terms of communication and vision because he's already very well known and liked within the organization," Sherman tells Yahoo Finance.

Intelligent Alpha founder and CEO Doug Clinton joins the show to break down the investment firm’s new artificial intelligence-powered exchange-traded fund (ETF), Intelligent Livermore (LIVR), and how AI could transform trading. “We have created an investment committee built on AI [with] three different large language AI models: GPT, Claude, and Gemini. They analyze data and a philosophy that we give those committee members, and then they create a portfolio of stocks that reflect whatever portfolio or exposure we want the AI to create for us,” Clinton explains.

Intelligent Alpha launched its AI-powered ETF Wednesday on the Nasdaq, and says that it is currently exposed to major investing themes like AI through names like Meta (META), as well as global markets like Asia and Latin America.

TikTok was in court earlier this week making its case against the so-called "ban bill" which would require its Chinese parent company ByteDance to divest from the social video app or risk a nationwide ban. Project Liberty Founder Frank McCourt is hoping to acquire the company.

"I think it's pretty clear to everyone now that the Chinese Communist Party controls TikTok and that they're holding the information on 170 million Americans, is not a good thing. It's a real threat. And of course, the ability to manipulate 170 million Americans is even more of a threat."

If McCourt were to acquire TikTok, he would plan to migrate the platform's users to a "new protocol where each individual would control their identity and their data." He emphasizes that he is not interested in the algorithm, saying, "We don't need it, and we don't want it."

This post was written by Melanie Riehl

Video transcript

Hello and welcome to asking for a trend.

I'm Josh Lipton and for the next half hour, we're breaking down the trends of today that will move stocks tomorrow.

There is a lot to keep track of.

So we're focusing on what you need to know to get ahead of the curve.

Here are some of the trends.

We're going to be diving into what a difference a day makes stocks soaring the day after the Federal Reserve cut rates by 50 basis points, the Dow S and P 500 both closing at fresh record highs, but it was tech stocks with the true leader on Wall Street.

And we're taking a deeper dive into the tech trade as some of the biggest names in the sector hit new highs plus using artificial intelligence to invest.

We've got the CEO of a new venture that's using the emerging technology to help make decisions for your portfolio.

And the future of tiktok.

I'm speaking with billionaire investor Frank mccourt about his bid to buy the social media giant and how he wants to transform the app.

The A I boom has made traders eager to get in on the artificial intelligence trade.

But a new firm is going straight to the source on A I Investing intelligent Alpha using artificial intelligence as its investment committee designed to construct various investing strategies.

And here with more on how A I can power your portfolio.

We have intelligent alpha founder and Ceo Doug Clinton Doug, great to see you on set.

So let's start a high level Doug.

So what you're using A I for is to construct these different investment strategies.

It's A I uh as portfolio manager, right?

Walk us through it.

That's exactly right.

And first of all, I'm having flashbacks because seven years ago we launched my other company Deepwater with you.

I remember being in San Francisco when we announced that.

So it's fun to be here with you to talk about intelligent Alpha.

Here's how it works.

We have created a investment committee built on A I three different large language A I models.

So GP T Clad and Gemini, which people are probably familiar with, they analyze data and a philosophy that we give those committee members and then they create a portfolio of stocks that reflect whatever portfolio or exposure we want the A I to create for us.

And you also have an ETF tug, right?

That's leveraging this strategy.

We do.

We just launched the ETF yesterday on the NASDAQ.

So it's called the Intelligent Livermore ETF.

The ticker is Livr and it basically analyzes some of the world's greatest investors and traders, it sort of figures out how do they think about the world today and then it constructs a portfolio that reflects those views.

And so in that ETF I would find names such as what?

Right now, there's a few different big themes and I'll give you a few names.

So the themes that A I is interested in right now because it thinks the world's greatest investors are, are A I.

Uh it likes the Asian trade, it likes Latin America for GEO exposure and then it also has some defensive exposure.

So health care and consumer staples, you will find names that are familiar like meta, that's one of its top holdings.

They're also what I think are more contrarian names like Pinduoduo, Chinese stock.

It was down 30%.

That's interesting.

Yeah, a month ago and there's kind of a, an alternative bet there.

They think that stock might bounce back.

I get the potential and help me if I'm thinking about this correctly.

I I understand the potential that you've got to minimize the human involvement.

And there are upsides that, I mean, you could argue, you know, OK, I'm I'm minimizing emotion, right?

But is there, is there a potential risk there too?

Are you minimizing all the good that can come with that?

Just the the creativity, the dynamism, the ingenuity of the human mind.

I actually think in a way in terms of our process, it actually augments creativity in a sense because where I think humans go wrong as investors is that they succumb to emotion.

Eventually you've given enough time, we'll make a dumb decision because our portfolio is up a bunch and we think we're geniuses or it's down a bunch and we think we're terrible and it's just the way it is.

But what I think A I does with the guidance of a human analyst, which is me in this case kind of saying here's the exposures we're looking for.

Now you go and figure it out being the A I I think it optimizes the human creative element where we kind of figure out what exposure do we want.

And then the A I has free rein from there and you mentioned how humans, you know, they'll make mistakes, right?

A I though, I mean, you can get mistakes there too, right?

Inaccuracies, hallucinations.

How do you try to minimize that?

So we have essentially a redundancy layer before the portfolio is approved and actually applied in any portfolio that we do.

A human analyst will review the portfolio, make sure there's no hallucinations that just don't make any sense.

But there's a funny thing about hallucinations.

You just mentioned creativity a minute ago, Josh, another word for hallucination is creativity, right?

Mark Andreessen has talked about this like they're, they're kind of closely aligned and what's funny is sometimes hallucinations that we see these A I committee members make they're actually really interesting stock ideas And so I've been telling people this just sort of like uh anecdotally just seeing.

Oh, that's a weird one that the A I put in it wasn't in the set that we gave it to analyze, but it actually makes sense for the strategy.

Some of those, for some reasons, like those stocks tend to perform the best.

I don't know what it is, but sometimes hallucinations are a good thing.

Doug great to have you on set.

Thanks for joining us here.

Stick around.

We're ask you for a trend right on the other side.

Earlier this week, Tik Tok made its case in court against a bill that would require it to be divested by its Chinese parent company Bytedance or else risk a nationwide ban and joining us now is someone hoping to acquire that company, Frank mccourt Project liberty founder Frank.

It's good to see you.

Maybe I, I want to start at a high level question, Frank.

I'm curious whether you agree.

You think that tiktok does represent a national security risk, Frank?

Yeah, absolutely.

We, you absolutely believe that we agree with the government's position.

I think it's pretty clear to everyone now that the Chinese Communist Party controls tiktok and that uh they're holding the, uh the, you know, information on 100 and 70 million Americans is not a good thing.

It's a, it's a, it's a real threat and of course, the ability to, to uh manipulate 100 and 70 million Americans is even more of a threat.

And Frank, you know, there, there is some skepticism though, as this, as this kind of plays out that, that the CCP, the Chinese Communist Party would actually ever permit a divestment.

You know?

How do you think about that?

Yeah.

Well, look, I, I don't have all the answers.

Josh, but we're, we're, we're making a bet here.

Right.

We, we, we believe number one, the government's position will be upheld and we're gonna find that out shortly that the, as you said, the oral arguments were just this past Monday.

And so once we get through that hoop, we'll see where we stand.

And I think that, uh, uh, my personal view is that Byte Dance is gonna have an important decision to make, which is whether they, uh, shut it down or, or sell the US portion.

And, um, I, I, I'm betting they sell it and I don't, II, I don't want them to shut it down nor do the 170 million users want it to be shut down because people are using the app, they enjoy the app.

That's not the issue.

The issue is how the people's data is being used and what our plan is to actually migrate the 170 million users over to a new protocol where each individual would control their identity and their data.

So that's interesting, Fred because that, that's a big question, right?

I mean, let's say they divest and the sale happens, you know, a question that's out there and is a fair one is, you know, it, it, it'd be hard to imagine.

They part with the algorithm, the secret sauce.

So what would, you know, American investors like yourself?

What would you actually really be buying at that point?

Yeah, you'd be buying obviously the brand, the 170 million user base and all the content And, and uh yeah, I want to highlight that we're, we're not interested in the algorithm.

We don't need it and we don't want it.

And uh and China said they're not gonna, you know, they're not gonna let go of it in any event.

So as a matter of fact, I'm uh I think we may be the only ones that check all three boxes.

And what I mean by that is that um we check the cus box.

Uh We're not a national security threat.

We're not, we're, we're American, not foreign, we checked the antitrust box, right?

We're not big tech.

So we don't have an antitrust issue and we have built the tech stack that would enable us to on board the user base of tiktok and uh and do so in, in, in a way that actually, as I said earlier, gives people control of their identity and their data and, and so forth.

So uh we check the three boxes.

I think that's very, very important.

We don't want to need the algorithm um, as you point out.

And so, yeah, I'm, I'm, I'm pretty excited about our prospects.

Of course, we'll see.

Uh we don't have a crystal ball in terms of what the outcome of the litigation is and, and we certainly don't know what tiktok or by dance will ultimately decide to do.

What, what about Frank is the politics of all this, you know, and by that, I mean, you know, Trump and Harris are both on tiktok.

Does that, does their enthusiasm any way?

You know, cloud, whether this thing does get, you know, divested and sold?

Yeah, I think, I think you're touching on a very, very important point and here here lies the conundrum, right?

We have, we have uh technology, tiktok is an example but our own big tech platforms do the same thing.

They scrape our data aggregate, it, apply algorithm algorithms and, and get us to do stuff and we're learning that some of that stuff is not good, right?

It's harmful to democracy, it's harmful to our information ecosystem, you know, the myths and disinformation.

It's hard now to know what's fake and what's real.

And of course, we're reading more about the harms to, to Children.

So we need to fix this internet technology.

And uh we can, I mean, that's, that's the good news project.

Liberty is all about a solution here.

We're not, we're not here to just throw another log on the fire and say, you know, the world is coming to an end.

The the the the internet is something that's here to stay.

We all use it.

Presidential candidates use it.

The point is the platforms are, are operating in a way that's very exploitive and we need alternatives to tiktok alternatives to the current big tech platforms where we get the good out of these platforms without after suffering the harms and suffering the bad Frank.

Thank you so much for joining the show today.

Big important topic.

Appreciate it.

Yeah, Josh, thanks for your time.

You take care of yourself.

Bye bye.

Coming up, Nike CEO is stepping down.

We're gonna speak to an analyst about the move when we return, Nike, Ceo, John Donahoe is stepping down, replaced by Elliott Hill.

Nike veteran Elliott Hill will become president and CEO effective October 14th here with more is Bernstein senior analyst, Anisha Sherman Anisha.

It is good to see you so big news after hours.

Elliott Hill is in John Donahoe is out investors at least initially here celebrating the stocks of about 10% but you know the company backwards and forwards, Anisha.

What do you make of this news?

I think this is very good news for the stock.

Both the, both the executive named as well as the Timing.

Elliott Hill has worked at Nike for 32 years.

He's a product guy.

He's ran retail in em in us in North America.

He knows the company and the product very well.

And from what we've heard at Nike, amongst former employees that we've spoken with, he's also very liked at Nike.

So this is not only the right skill set in terms of understanding product and understanding Nike, I think he will be the right leader in terms of communication and vision because he's already very well known and liked within the organization.

And the timing is great too because Nike is having an Investor Day in exactly two months on November 19th.

And you know, they, they've promised talking about medium term targets, it doesn't make a whole lot of sense for an outgoing CEO to talk about medium term targets.

So you need the new leader in place before you can have that conversation.

So the timing works very well.

Also, you sound very positive.

It's Julie here.

It's good to see.

You sound very positive on Nike.

Uh uh but the stock is down 25% of your date.

And iii I understand you want to look forward in the idea of this new CEO, but I do wanna spend at least a be talking about John Donahoe, how much damage did he do at Nike?

So a lot of the blame has been placed on Donahoe himself and his lack of a product background.

And I think that did contribute, you know, it, it helps to have a CEO with a brand and product background who can make calls that need to be made, who can identify where there are red flags because they have the experience to do that.

And the outgoing CEO did not.

But part of the problem also was not his specific experience, but the fact that the company focus moved away from product, move towards tech and digital and other things.

And so they lost talent in product and they didn't spot some of the red flags in product.

They cut out a lot of the feedback loops and products.

So it was an organizational shift, not necessarily the background of one individual, but the organization's culture shifted away from product and that's something that needs to be fixed.

So, Anisha, uh you know, Elliott Hill now coming in, what are his priorities, Anisha.

So I think the first priority will be to set a path forward.

And so the Investor day is coming at the, at a good time.

He needs to set the path forward for the next five years.

Set some targets, give investors a sense of where this company is headed and what kind of numbers to expect, what kind of algo to expect for growth and earnings growth.

And that will set the course of of investor expectations and probably stabilize the stock a little bit and then he needs to do more work.

I mean, this is not a slow, this is, this is a tanker that needs to be moved and it takes time.

Um But I think investors will give him a pass if the targets sound reasonable, the goals sound reasonable and will give him a pass for the next six months to a year to fix the ship before it starts working again.

Anisha what needs to be the goal in terms of product?

So Nike has somewhat lost its mojo in the market.

Um You know, it, it made several different mistakes.

One was just the product process got so convoluted and delayed with a couple of different reorganizations changing the way product reviews are done to the point where even small incremental editions take a year to get out to market.

So we need some more nimbleness, we need some more speed and reaction to the market.

And then the second piece is we just need to, they just need to control scarcity in the market.

They over distributed several of the hot products to the point where they lost their brand heat.

So they need to regain that scarcity and demand pull, you know, as, as you know, Nike made these missteps um lost its mojo as you say, who gained um from those missteps?

Um What happened at the same time is there were a couple of emerging brands on and Hoka in particular that took over the shelf space that Nike gave up, that gained a lot of the consumers that, that didn't like what they saw from Nike anymore.

So they gained a lot of the market share and then more Adidas, which has been on a similar journey of its own with a new CEO and a turnaround has, has had a great year so far.

So they've gained some on the lifestyle side where their Samba and Gazelle shoes are sort of the issue of the summer this year and Nike's Jordans and dunks aren't anymore.

And I know that you've got an outperform rating on Nike.

Um, your price targets 109.

Um Is that especially with this management change?

Is that your top pick here in footwear or would you look at some of those competitors?

I think Nike is not an immediate pick.

I mean, the CEO catalyst was on the horizon.

You know, we, we knew it was coming at some point before the Investor Day, we expected that it would be at the September 20.

Uh the October 1st um quarterly results.

We didn't expect it to be sooner than that, but that isn't a catalyst that the market was expecting is very good for the stock.

The November Investor Day will be another catalyst.

But beyond that, we just need to see this turnaround play out.

So it's gonna be a little bit of a slower burn.

Beyond that, I think elsewhere in the market, you can probably find faster recovery stories um for more beaten down names.

But I do like Nike, I think I, I like it over the next six months and I like it on a longer term horizon Aisha big news after hours.

Thank you so much for helping us think through it.

Appreciate it.

That's a wrap on today's.

Ask for a trend.

Be sure to come back tomorrow at 430 pm Eastern for all of the latest market, moving stories affecting your wallet.

Have a great night.