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 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

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!