Warren Buffett Just Doubled Down on This “Failing” Retailer

If you were to read the reports about Wal-Mart's (NYSE: WMT  ) latest quarter, you'd be excused for concluding that the world's largest retailer is on the brink of extinction. But if this is the case, then why did Warren Buffett's Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) just double down on the company's stock?

In one of The Motley Fool's most popular articles this month, my colleague Travis Hoium concluded that Wal-Mart "has begun to lose its cache with consumers and major holes are starting to form in its business."

Travis pointed specifically to the retailer's falling domestic same-store sales and the contraction in its international operating margin. In the three months ended April 30, U.S. comparable sales dropped by 0.4%. And on a year-over-year basis, its margins from stores overseas fell by nearly 100 basis points.

With this in mind, what explains Buffett's heightened interest in the company? As Motley Fool contributor John Maxfield discusses in the video below, there are three likely explanations.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click HERE to discover more about this industry-leading stock... and join Buffett in his quest for a veritable landslide of profits!


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 25, 2014, at 8:45 PM, Charos wrote:

    How does he find the time to do anything, having to run 10,000 Geico commercials every day.

  • Report this Comment On May 25, 2014, at 9:48 PM, madmilker wrote:

    He bought a Choo Choo after Wal*Mart partnered on that port in Mexico back in 2006 too....

    You think he will double down on rail spikes next...

    Maybe he'll sell off all that foreign fruity underwear and promote nude beaches....

    or...

    stops drinking cherry cokes and starts sipping George Dickel #12....

  • Report this Comment On May 25, 2014, at 11:11 PM, JamesBailey wrote:

    Certainly, anyone who calls themselves fools like The Motley Fool should understand a little something about corporations, and their money. They have a habit of making stupid decisions with their money all the time. Witness GM, Phillips 66, Bank of America, et al. And in the case of Wal-Mart, it has reached the point of the Law of Diminishing returns. No matter how much money a corporation invests in itself, the rate of return is always limited. Wal-Mart has reached the saturation point at home, and abroad. When a corporation is the world's biggest, it has no more worlds to conquer.

  • Report this Comment On May 25, 2014, at 11:31 PM, StatMan40 wrote:

    I doubt that Warren has been in a WalMart store in 20 years. I have. Shelves are often empty of the product you want, prices have gone up to where they are no longer reliably the cheapest, checkout lines are long. They have gone downhill. I bought Target stock instead. I hope WM turns it around. Even Kmart/Sears stock went up for a while, but they now have one foot in the grave.

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9/22/2014 4:01 PM
BRK-A $208900.00 Down -3100.00 -1.46%
Berkshire Hathaway… CAPS Rating: ****
BRK-B $139.26 Down -1.30 -0.92%
Berkshire Hathaway CAPS Rating: *****
WMT $76.31 Down -0.53 -0.69%
Wal-Mart Stores CAPS Rating: ***

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