Why Warren Buffett Still Believes in Wal-Mart Stores, Inc.

If there's one big company that's been in the crosshairs of both social activists and disappointed shareholders lately, it's Wal-Mart  (NYSE: WMT  ) . Though shares of the company are up a healthy 50% since late 2011, there's been trouble brewing on multiple fronts.

It's no secret that there are lots of folks out there who question how well Wal-Mart treats its everyday employees. Some might say as shareholders, the only thing investors should worry about is the company's financial performance. But even that is coming under scrutiny.

As my Foolish colleague Travis Hoium recently pointed out, the company's same-store sales domestically are falling, and margins are shrinking abroad. And all of this is happening at a time when the retail sector is actually growing.

These trends, however, haven't stopped the world's greatest investor, Warren Buffett, from gobbling up more shares of Wal-Mart. When Buffett's Berkshire Hathaway  (NYSE: BRK-A  ) (NYSE: BRK-B  ) released its 13-F filings recently, it showed that Berkshire's stake in Wal-Mart had increased by 17% with the purchase of 8.6 million Wal-Mart shares.

Berkshire's partial ownership of Wal-Mart dates back years, with the position growing large enough to garner recognition back in late 2005. Since then, Wal-Mart has grown to be Berkshire's fifth largest investment holding -- valued at roughly $4.4 billion.

So why does Buffett still believe in Wal-Mart when others don't? Check out the following slideshow to find out.

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  • Report this Comment On May 24, 2014, at 4:35 PM, JeanDavid wrote:

    I wonder if Mr. Buffett has considered the likelihood of the value of the dollar dropping to the point where China will not accept payments in dollars anymore? Russia is considering very seriously accepting payments for oil and natural gas in rubles, euros, Chinese Yuan, etc. To protect the dollar, the US has destroyed Iraq when it was proposing to accept other currencies than the petro dollar in payment for oil, and they seriously do not want Iran to do that. And the more we threaten (or deliver) economic sanctions to various nations, such as Russia and China, and the rest of the BRICs, the more they will stop using the dollar in international settlements. This could harm Walmart's profits because their prices would have to go up and then American customers would not be able to afford their stuff.

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Brian Stoffel

Brian Stoffel has been a Fool since 2008, and a financial journalist for the Motley Fool since 2010. He tends to follow the investment strategies of Fool-founder David Gardner, looking for the most innovative companies driving positive change for the future.

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9/2/2015 4:00 PM
BRK-A $199360.00 Up +1215.70 +0.61%
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Wal-Mart Stores CAPS Rating: ***