THE MILLEGAN MEMO: JUNE 2025
Brought to you by The Woodworth Contrarian Fund
Your pockets are inflating (a little bit more than expected), Nike bounces on bad news, and the US Dollar made records (not necessarily good ones).
- Managing Partners Drew Millegan & Quinn Millegan
“Even the world’s greatest business is not a good investment if the price is too high.”
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INFLATION’S NOT DEAD, IT’S JUST PLAYING HARD TO GET
Core inflation rose higher than expected in May. Core inflation excluding food and energy, one of the Federal Reserve’s preferred gauges of the economy, posted a slightly higher reading than expected, with estimates hovering around 2.6% versus a posted 2.7% annual rate.
The effects of recent whiplash taxes imposed by executive order could still take months before they are felt. Prior to record-high import taxes being levied in March and April, most businesses that could load up on inventory orders ahead of tax increases did so in February. It is expected by economists now that these higher pre-tariff inventories will mostly be exhausted by the end of the summer, and shifts in GDP and price readings may start to be more concretely felt towards the end of this year. Many businesses have taken advantage of this relative quiet period to creatively rejigger their supply chains to minimize tariff impacts, such as moving out of China into less tariffed third countries, but it remains to be seen exactly how much can be done to fully offset across-the-board higher taxation of so many basic and specialty goods.
NIKE: JUST MISS IT (BUT NOT ENOUGH TO MATTER) - $NKE
Nike reports positive surprise on fiscal Q4 2025 earnings results. Nike (NYSE:NKE) reported earnings results for the quarter ended May 31, 2025. The company posted Q4 revenues of $11.1 Billion, down ~11% from prior year on a currency-neutral basis, and diluted earnings per share of $0.14. The street consensus expected $0.12 per share on revenues of $10.67 Billion. Notably, gross margins decreased to 40.3% from 44.7% over the same period last year, primarily due to higher rates of discounting.
Not as bad as expected but good enough for the markets. Nike stock jumped over 15% the day after earnings were reported, closing a touch above $72 on Friday. This puts the company’s per-share price back in line with $70+ price levels the company was trading at pre-tariff bonanza in March, which goes a long way toward explaining why the share price spiked on ostensibly bad news. What is likely catching investors’ attention here has to do less with tariff impacts evaporating - the company expects tariffs to add $1 Billion in costs to the current fiscal year’s results - and more to do with seeing a light at the end of the tunnel from the company’s turnaround plan.
Please note that at the time of this publication, neither the Millegan Brothers nor the Woodworth Contrarian Stock & Bond Fund, LP hold a position in NKE; however, either the Millegan Brothers or the Woodworth Contrarian Stock & Bond Fund, LP may or may not take a position in NKE in the future and may or may not be in and out of the position at their own discretion from time to time.
GOLD’S UP, DOLLAR’S DOWN, AND KEYNES IS SPINNING IN HIS GRAVE
The U.S. dollar dropped below 97 in the Dollar Index, hitting its lowest level since 2020 and marking the worst first-half price-collapse since 1986. The Bloomberg Dollar Index plummeted over 8% year-to-date while the ICE Dollar Index tumbled approximately 10.8%, with foreign central banks orchestrating a spectacular $50.6 billion fire sale of U.S. securities in April alone. Private foreign investors joined the exodus with $20.5 billion in net sales, while foreign official institutions dumped a staggering $30.1 billion in long-term U.S. securities. When Israel struck Iranian nuclear facilities and geopolitical chaos erupted, gold soared above $3,350 per ounce while the dollar barely managed a whimper - completely shattering the decades-old safe-haven playbook.
Be careful what you wish for - weakness in the dollar could hint at the beginnings of a structural transformation of the global monetary system. This dollar collapse represents a fundamental rewiring of global capital flows that may stick around long after the current US administration, and has stirred worries of a fragmentation of global financial markets into more localized regional blocs. European institutional investors have slashed their dollar exposure to the lowest levels since 2022, while the rise of "nontraditional reserve currencies" including the Australian dollar, Chinese renminbi, and Nordic currencies now accounts for the dollar's declining reserve status. If this movement out of the dollar continues it could still take decades to fully unseat the dollar from its status as the global reserve currency, but the process of financial market fragmentation stands to trap capital in local markets. This, in turn, would create operational inefficiencies that signal the end of the dollar-dominated system that has defined global finance since Bretton Woods. The IMF's data confirms this is not a temporary phenomenon but an "ongoing gradual decline" as central banks worldwide diversify away from dollar-denominated assets.
DEEP ROOTS. STUBBORN GROWTH. OREGON-BASED.
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Drew Millegan (left) & Quinn Millegan (right) in front of the Charging Bull in New York City.
About the Managers: Brothers Drew Millegan and Quinn Millegan manage the Woodworth Contrarian Stock & Bond Fund, a hedge fund based in McMinnville, Oregon. They grew up in the finance world, and specialize in contrarian investment strategies in the US Public and Private markets.
Something missing from your portfolio may be a diversification into the Woodworth Contrarian Fund for accredited investors. Now is a great time to diversify your portfolio with an investment into a multi-award-winning fund. An exposure to a value-based contrarian strategy is a unique opportunity for your long term capital that you’re seeking aggressive returns for. With eight years of the Woodworth Fund under management, the Millegan Brothers are trained stock-pickers and experienced venture capital investors with a proven track record. Give us a call today to discuss a liquid investment with independent administration and independently audited monthly statements and a personal relationship.
