That kind of underperformance might be a cause for concern for some investors. However, it requires a closer inspection of the cause to see if there's really something going on or if it's an opportunity for prudent investors. As we'll see later, the disappointing returns from Nike in 2016 is largely due to the excessive valuation towards the end of 2015 and a healthy pullback to reasonable levels.
Nike's business model is fairly straight-forward in which they design and produce athletic apparel. Their moat style is primarily their brand strength where they've ingrained with consumers the idea that their products have better performance and are higher quality. That could be up for debate; however, there's no doubt that the same item with the Nike Swoosh will command a higher price than without.