The smart money is somehow underweight the stock. During the second quarter, the number of funds with long positions among over 700 that we track went up by two to 65, while the aggregate value of their holdings slightly fell to $8.52 billion from $9.21 billion. However, these investors amassed only 3.70% of the company at the end of June. Among them, Warren Buffett‘s Berkshire Hathaway is Wal-Mart’s largest shareholder with 60.39 million shares, while Michael Larson’s Bill & Melinda Gates Foundation Trust is the second-largest shareholder with 11.6 million shares shares. Both funds kept their holdings constant from March to June 30. Overall, most top shareholders of Wal-Mart in our database have boosted their stakes during the quarter. For example, Richard S. Pzena’s Pzena Investment Management increased its stake by almost a threefold to 5.18 million shares, while David E. Shaw’s D. E. Shaw added 1.22 million shares to its stake, reporting ownership of 3.49 million shares in its latest 13F filing.
Wal-Mart’s current troubles aren’t surprising. The company has historically done better in recessionary times when people have less to spend. Given the company’s wide moat, attractive valuation of 13.6 times forward earnings, and nice dividend yield, we agree with Buffett and think Wal-Mart shares are a good long-term holding.