Wal-Mart Stores, Inc. (WMT): Insiders Aren’t Crazy About It But Hedge Funds Love It

Wal-Mart Stores, Inc. (NYSE:WMT) has seen a mix of interest from smart money investors of late.

At the moment, there are plenty of gauges market participants can use to monitor the equity markets. Two of the most useful are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top money managers can outclass the S&P 500 by a superb margin (see just how much).

Equally as key, optimistic insider trading activity is a second way to look at the financial markets. Just as you’d expect, there are many reasons for an executive to downsize shares of his or her company, but just one, very simple reason why they would behave bullishly. Several academic studies have demonstrated the impressive potential of this strategy if “monkeys” know where to look (learn more here).

Wal-Mart Stores, Inc. (NYSE:WMT)

Keeping this in mind, we’re going to study the latest info for Wal-Mart Stores, Inc. (NYSE:WMT).

How are hedge funds trading Wal-Mart Stores, Inc. (NYSE:WMT))?

In preparation for the third quarter, a total of 54 of the hedge funds we track were bullish in this stock, a change of 4% from the previous quarter. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.

Out of the hedge funds we follow, Warren Buffett’s Berkshire Hathaway had the largest position in Wal-Mart Stores, Inc. (NYSE:WMT), worth close to $3.6684 billion, comprising 4.1% of its total 13F portfolio. Sitting at the No. 2 spot is Bill & Melinda Gates Foundation Trust, managed by Michael Larson, which held a $827.1 million position; 4.6% of its 13F portfolio is allocated to the company. Other peers that are bullish include Boykin Curry’s Eagle Capital Management, D. E. Shaw’s D E Shaw and Donald Yacktman’s Yacktman Asset Management.

As aggregate interest spiked, certain bigger names have been driving this bullishness. Berkshire Hathaway, managed by Warren Buffett, established the biggest position in Wal-Mart Stores, Inc. (NYSE:WMT). Berkshire Hathaway had 3.6684 billion invested in the company at the end of the quarter. Michael Larson’s Bill & Melinda Gates Foundation Trust also made a $827.1 million investment in the stock during the quarter. The following funds were also among the new WMT investors: Boykin Curry’s Eagle Capital Management, D. E. Shaw’s D E Shaw, and Donald Yacktman’s Yacktman Asset Management.

How are insiders trading Wal-Mart Stores, Inc. (NYSE:WMT)?

Legal insider trading, particularly when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past half-year. Over the latest half-year time frame, Wal-Mart Stores, Inc. (NYSE:WMT) has experienced zero unique insiders buying, and 4 insider sales (see the details of insider trades here).

We’ll also examine the relationship between both of these indicators in other stocks similar to Wal-Mart Stores, Inc. (NYSE:WMT). These stocks are Family Dollar Stores, Inc. (NYSE:FDO), Dollar Tree, Inc. (NASDAQ:DLTR), Dollar General Corp. (NYSE:DG), Target Corporation (NYSE:TGT), and Costco Wholesale Corporation (NASDAQ:COST). This group of stocks are in the discount, variety stores industry and their market caps resemble WMT’s market cap.