Israel "Izzy" Englander is a billionaire portfolio manager who serves as CEO of the hedge fund Millennium Management. According to Millennium's latest 13F filing, Englander's fund sold 8.1 million shares of Walmart (WMT +0.81%) during the third quarter.
So what? Consider the fact that the fund had been consistently adding to its position in Walmart during the three prior quarters.
At first, I was a bit perplexed as to why Englander decided to trim the fund's position in Walmart right now. However, after some careful thinking and consideration, I think this decision makes sense.
Below, I'll outline how Walmart has performed over the last few years and detail why selling the stock right now could be a savvy move.
NASDAQ: WMT
Key Data Points
Walmart has been a big winner over the last few years
The last few years have been a challenge for brick-and-mortar retail. Inflation reached its highest levels in decades, essentially forcing the Federal Reserve to institute a number of aggressive interest rate hikes. The one-two punch of rising costs and high interest rates made consumers more cost-conscious -- and retailers were vulnerable to these trends.
One retailer that has thrived during this period of macroeconomic challenges is Walmart. The table below shows Walmart's same-store sales trends over the last year across its various properties:
| Category | Q3 FY24 | Q4 FY24 | Q1 FY25 | Q2 FY25 | Q3 FY25 |
|---|---|---|---|---|---|
| Walmart U.S. same-store sales | 4.9% | 4% | 3.8% | 4.2% | 5.3% |
| Walmart Mexico same-store sales | 8% | 6.3% | 9.2% | 5% | 4.4% |
| Walmart Canada same-store sales | 5% | 1.5% | 3.8% | 3.4% | 3.1% |
| Walmart China same-store sales | 18.6% | 6.6% | 12.5% | 13.8% | 15% |
Data source: Walmart investor relations.
Overall, Walmart has been able to consistently grow its same-store sales across various geographic regions over the last year. It's likely that the primary reason consumers are continuing to return to Walmart is due to its price value. According to the company's management, much of its growth is stemming from increased transactions and average ticket orders.
In other words, Walmart's growth isn't driven by the cost of inflation being passed onto shoppers. Rather, the company is able to compete with other retailers on price -- enticing shoppers to keep returning and spending more.
Image source: Getty Images.
Why Would Millennium sell now?
The chart below measures Walmart's stock price and the U.S. inflation rate over the last three years. While it's clear that Walmart stock has been a strong performer, the share price has kicked into an entirely new gear as inflation levels continue to cool.
WMT Total Return Level data by YCharts.
Over the last three years, Walmart has posted a total return of 93% -- nearly triple that of the S&P 500. Furthermore, as I write this, Walmart's split-adjusted share price of $89.67 is just pennies from an all-time high.
If Englander was bullish on the economy and thought inflation were going to continue to drop, wouldn't he want to keep holding onto his Walmart position? Well, it might not be that simple.
Beyond retail
I don't think Englander's view of the economy (good or bad) has anything to do with Millennium's decision to reduce its stake in Walmart. I think the fund is locking in some profits, as Walmart stock has clearly been on quite the run for an extended period of time.
Even though Walmart is well positioned in the retail environment, competition is going to intensify as the holiday season approaches. While Walmart's latest batch of financial guidance was encouraging, I wouldn't want to hold the stock knowing that other popular retail outlets, such as Amazon and Target, are going to bring the heat over the holidays.
Don't just take my word for it. According to Millennium's latest 13F, Englander's largest sells during the third quarter included none other than Amazon, as well as Apple -- two other darlings in the consumer environment. In turn, some of the fund's largest buys last quarter were in Microsoft, Spotify, and Eli Lilly.
Millennium likely is choosing to move on from defensive stocks, such as Walmart, and rebalancing its portfolio in favor of more high-growth opportunities in areas such as artificial intelligence (AI) and healthcare right now.
