Fairfax Financial Takes 22% Stake In Under Armour As UBS Sees "Turnaround Stock"
Fairfax FinancialStruggling apparel brand Under Armour, founded and currently led by Kevin Plank, has seen its market capitalization collapse after years of strategic missteps, brand erosion, and tough global competition. However, a newly disclosed filing shows that a Canadian financial holding company has taken a sizable stake, alongside a recent, more constructive turnaround call from UBS. This suggests the struggle phase may finally be nearing an inflection point.
Fairfax Financial Holdings disclosed a 22.2% ownership stake in UA Class A common stock in a new Schedule 13D filing, stating that the position was acquired for investment purposes and could be adjusted over time.
Fairfax has become the top shareholder.
The revelation sent UA shares up 5.5% in pre-market trading in New York. Shares have imploded over the years, falling back to roughly 2010 levels, largely because the brand failed to remain relevant.
In September, UBS analyst Jay Sole wrote to clients, "We think sentiment will turn positive in FY27, driving stock outperformance."
Just days ago, Sole told clients, "We view UAA as a turnaround stock."
UAA is back.
The analyst explained why:
We believe improving sales growth will cause the stock's valuation to increase: We view UAA as a turnaround stock. We believe UAA will achieve a 25% 5-yr. EPS CAGR and this growth will positively surprise the market. Importantly, we expect UAA to deliver considerable innovation and better leverage its brand name, which should help drive 2nd derivative improvement in the company's North America revenue growth rate. Our view is an improving North America sales growth rate will boost the stock’s valuation. Our $8 price target is 61% above the current stock price.
Investors materially undervalue the Under Armour brand name, in our view: Under Armour remains one of the world’s best known and liked athletic wear brands. UBS Evidence Lab's 11th annual global athletic wear survey reinforces our conviction in this view. Survey results indicate Under Armour’s brand name belongs in the same class of brands such as Lululemon, Jordan, Adidas, Puma, On, Hoka, Skechers, and New Balance. The average market cap for these brands which are publicly traded as standalone entities is $19B vs. just $2.1B for UAA. We’re not saying UAA is worth $19B, but rather the valuation differential between UAA and its competitors is far too wide in our view.
Two key survey takeaways:
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UAA's unaided brand awareness, purchase intentions, and attributes are strong. These stats are the main reasons we continue to believe the Under Armour brand name is powerful. Under Armour's unaided awareness is 4th globally for all athletic apparel brands, trailing only Nike, Adidas, and Puma (Fig. 4). With respect to athletic apparel purchase intentions, UAA ranks 4th among the global brands, behind just Nike, Adidas, and Puma (Fig. 12). Also, global consumers continue to associate Under Armour with phrases such as "high quality products" and "good for doing sports" more than they do for most other brands (Figs. 19-20).
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Product innovation will catalyze sales growth acceleration, in our view. Roughly 34% of global survey respondents associated the brand with innovation, but this is down ~500 bps y/y to a 8-yr. low (Fig. 29). This probably explains part of UAA's recent financial trend. However, we believe UAA's innovation will improve significantly (link) and this will drive better consumer perceptions as well as more loyalty (Fig. 39), conversion (Fig. 39), and full price selling (Fig. 45).
ZeroHedge Pro subscribers can read the full note in the usual place, where Sole lays out the detailed thesis supporting an $8 price target.
Tyler Durden
Tue, 01/06/2026 – 09:40