One Insider Owns 19% of This Dow Jones Stock. Should You Own It, Too?


High insider ownership is often a sign of a great investment. If a company's leaders are putting serious cash into the business by owning a big chunk of shares, they probably believe in the stock's long-term value -- and will align their business strategies with the best interests of shareholders.

Only seven of the 30 Dow Jones Industrial Average member stocks have more than 1% of their shares in insiders' hands. But when it snows, it's a blizzard. Say hello to Nike Chairman and co-founder Phil Knight, who owns a stunning 19.5% of Nike stock all by himself.

Phil Knight, surrounded by the shoes that built his legacy. Image source: Nike.

Knight's Nike shares aren't the same as the Class B shares you might buy on the open market. The bulk of his Nike holdings are in the form of Class A shares, a special ownership class that directly elects three-quarters of Nike's board of directors without giving Class B owners a say in the matter.

Knight owns just 15,480 Class B shares, but also 97% of the 178 million Class A stubs. Each Class A share is convertible into a single common Class B share at will, so Knight could go this way if he ever wanted to liquidate his controlling position.

Data from S&P Capital IQ.

This extreme insider position might be off-putting to some investors. But Phil Knight isn't some greedy micromanager coming into Nike with self-serving profits on his mind.

He started the company to meet the needs of actual athletes -- like himself, a just-graduated varsity middle distance runner for the University of Oregon Ducks. Knight has taken Nike from selling shoes out of his green Plymouth at local track meets to a dominating brand with a $$66 billion market cap and $26 billion in annual sales. Nike became a member of the Dow's hallowed halls last year -- all under Knight's guidance.

This is the kind of long-term manager you should actually root for owning a massive chunk of his own company. Knight is a proven winner and successful business developer, and exactly the guy you'd want on your side when owning a consumer-focused stock such as Nike.

Knight's large position was a key consideration when Tom Gardner recommended Nike to Motley Fool Stock Advisor subscribers four years ago. The stock has more than doubled since then, beating the market by 43%. This insider-owned Dow stock has served Tom Gardner's followers very well.

Are there more long-term home runs like Nike in this crazy market?
It's no secret that investors tend to be impatient with the market, but the best investment strategy is to buy shares in solid businesses and keep them for the long term. In the special free report "3 Stocks That Will Help You Retire Rich," The Motley Fool shares investment ideas and strategies that could help you build wealth for years to come. Click here to grab your free copy today.

The article One Insider Owns 19% of This Dow Jones Stock. Should You Own It, Too? originally appeared on

Anders Bylund has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Originally published