Some Explanations for Buffett’s Walmart Sell Off

Those bears might be jumping the gun because there are other explanations for Warren Buffett’s decision to dump almost all of his Walmart stock. They include:

  1. The Berkshire team thinks Walmart shares are overpriced and about to take a big fall. That might mean they think they might be able to pick up a lot more WMT at low price at some point in the near future.

  2. They think there are better deals out there such as airlines. Note: I’m skeptical of airlines at this point, but I’m not going to second guess Warren Buffett.

  3. Buffett likes Amazon and dislikes Walmart. Something that a lot of us stock geeks overlook is that Buffett has been bullish on Amazon for a long time. Uncle Warren has never been fond of the Everything Store’s stock, but he’s been investing in the company’s debt for a long time. He bought $98.3 million worth of its junk bonds back in 2003. Therefore Buffett was an Amazon bull long before it was fashionable. He’s also on record as a Jeff Bezos fan.

  4. Uncle Warren knows something we don’t. Buffett is heavily invested in a number of consumer sectors and he watches statistics and financials like a stock. Buffett might have noticed some trend that others are missing.

  5. Walmart might not be able to match Amazon’s resources. Amazon reported having $25.98 billion in cash and short-term investments on December 31, 2016. Walmart had just $5.939 billion in the bank on the October 31, 2016.

  6. Walmart is losing float, something Buffett loves. In July 2016, Walmart reported cash and short-term investments of $7.676 billion that fell by $1.7379 billion over the course of third quarter 2016 to $5.939 billion. Buffett family loves float and dislikes companies that cannot generate it.

Okay so there might be good reasons why Buffett is bearish on Walmart. Yet we should listen to him because Buffett predicted the Retail Apocalypse

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