Wal-Mart Mexico: A Target for Hedge Fund Short Sellers

Wal-Mart Stores Inc. (WMT), the global retail store behemoth which generated more than $443 B in revenues last year, is expected to come under selling pressure today. According to CNBC, this may be due to the New York Times report that came out (on Saturday) implicating Wal-Mart de Mexico in a bribery campaign in 2005 to win market dominance.

Warren Buffett


Wal-Mart Stores Inc. owns 69 percent of Wal-Mart de Mexico (WMMVY), also known as Walmex. It is due to report results on Monday and is expected to post a 14.1% increase in first-quarter profit. According to the CNBC article, Walmex could be the more attractive target for short sellers since it is this part of the business that’s directly involved in the bribery case.

Wal-Mart announced on Saturday that it was “deeply concerned” about the allegations in the Times report and had already begun investigations into its compliance with anti-bribery laws last autumn. According to the CNBC article, this investigation could cost Wal-Mart to devote millions of dollars and enormous amounts of manpower, and could eventually cost some top executives their jobs.

The CNBC article quoted private activist investor, Daniel Yu as being “more interested in shorting the Mexico traded ‘pure play’”. On the other hand, Kenneth Polcari, managing director of ICAP Equities in New York, expects only short-term pressure on Wal-Mart’s stock and doesn’t think that the bribery case will have any significant long-term effect. The CNBC article also reported that “Major institutional investors said Wal-Mart shares might face selling pressure in the near term, especially since the stock has risen about 17 percent in the past 12 months to $62.45, outperforming the S&P 500 index’s 3 percent rise”. In addition, short interest on the stock is very low. According to Date Explorers, just 0.5% of all shares are being borrowed for short sales.

News like this for Wal-Mart can open up good opportunities for both short-term and long-term investors. It can make a great short-sell play for short-term traders, but it can also be used by long-term investors to buy more shares at cheaper prices. Wal-Mart’s stock has experienced an annualized gain of 19.69% since its listing on the New York Stock Exchange in 1972 up to April 2012. That is a big figure when compared to the S&P 500’s annualized gain of 6.63% over the same period. Top hedge fund managers holding the stock include Warren Buffett of Berkshire Hathaway, Boykin Curry of Eagle Capital Management, and Ken Fisher of Fisher Asset Management.

As of this writing, Wal-Mart’s (WMT) stock price is down -4.80% from last Friday’s closing price of $62.45.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!