Member access

4-Traders Homepage  >  Shares  >  Nyse  >  Wal-Mart Stores, Inc.    WMT   US9311421039

SummaryQuotesChart AnalysisNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 

Hedge fund short-sellers to target Wal-Mart Mexico

04/23/2012 | 07:21am US/Eastern
Recommend:
0

(Reuters) - Hedge fund managers are bracing for selling pressure in shares of Wal-Mart Stores Inc on Monday, but market experts said it is the retail giant's less visible Mexican unit that could be the more attractive target for short sellers.

The New York Times reported on Saturday that Wal-Mart de Mexico, which is 69 percent owned by Wal-Mart Stories Inc, had orchestrated a widespread bribery campaign in 2005 to win market dominance. The investigative article alleged that senior Wal-Mart executives knew about the matter and tried to cover it up.

"I would not consider Wal-Mart shares expensive, but I definitely would not be a buyer at these levels in the 60s. I'm more interested in shorting the Mexico traded 'pure play,'" said private activist investor Daniel Yu, who has presciently shorted such stocks including Green Mountain Coffee Roasters Inc and Sino-Forest Sino-Forest Corp.

Wal-Mart said in a statement on Saturday that it was "deeply concerned" about the allegations in the Times report and began an investigation into its compliance with anti-bribery laws last autumn.

Analysts said Wal-Mart could be forced to devote millions of dollars and enormous amounts of manpower to the investigation, which could eventually cost some top executives their jobs.

Major institutional investors said Wal-Mart shares might face selling pressure in the near term, especially since the stock has risen about 17 percent in the past 12 months to $62.45, outperforming the S&P 500 index's 3 percent rise.

"You might find a little short-term pressure on the Wal-Mart stock, but I would not expect any long-term effect," said Kenneth Polcari, managing director at ICAP Equities in New York.

Short interest on the stock is very low. According to Data Explorers, which tracks short interest, just 0.5 percent of all shares are being borrowed for short sales, a very low figure.

John Marshall, a senior markets analyst for the United Food and Commercial Workers capital stewardship program, wonders if there will be lawsuits being brought on behalf of shareholders.

He said shareholders are going to want to know if the board was actively managing risk. "Either they were actively doing their job and fulfilling their responsibility to be managing that risk and they were lied to and the facts were being kept from them -- or they weren't. And that would be a bigger problem ... This is clearly an area of risk that the board should have been on top of."

Marshall is not a Wal-Mart shareholder, but UFCW funds own Wal-Mart shares through broad equity indexes that they participate in on behalf of more than 1 million members.

Wal-Mart de Mexico, better known as Walmex, closed on Friday at 43.06 pesos, after gaining steadily since August of last year when they were just under 30 pesos.

Walmex is due to report results on Monday. Mexico's largest retailer is expected to report a 14.1 percent increase in first-quarter profit, helped by a broad pickup in consumer spending as well as aggressive promotions that boosted sales.

Walmex has expanded rapidly since Wal-Mart opened its first store outside the United States in Mexico City in 1991, then part of a joint venture. In 2011, the Mexican unit reported total sales of 379 billion pesos ($29 billion). Walmart's fiscal 2012 sales, for the year ended January 31, were $443.85 billion.

(Additional reporting by Jessica Wohl, Editing by Tiffany Wu and Diane Craft)

By Jennifer Ablan and David Gaffen

Stocks treated in this article : Wal-mart de Mexico S A B de C V, Wal-Mart Stores, Inc.
Recommend :
0
React to this article
Latest news on WAL-MART STORES, INC.
1m ago WAL MART STORES : Rent-A-Center Awards Gift Card Donation to Michigan Vets
1d ago WAL MART STORES : -Mart replaces China CEO in Asia leadership shuffle
1d ago WAL MART STORES : Labor with force
1d agoDJWal-Mart Shuffles Asia Leadership
1d ago WAL MART STORES : Walmart Ready to Reveal New Store to Kaufman Shoppers
1d ago WAL MART STORES : Dallas Walmart Welcomes Shoppers to New Store
1d ago Sears Canada CEO says not pursuing more asset sales for now
1d ago WAL MART STORES : Skowhegan woman, 83, found dead near Walmart; death not suspic..
1d ago WAL MART STORES : Report calls for midcoast public transit route to run from Pen..
1d agoDJU.S. HOT STOCKS : Hot Stocks to Watch
Advertisement
Chart
Duration : Period :
Wal-Mart Stores, Inc. Technical Analysis Chart | WMT | US9311421039 | 4-Traders
Income Statement Evolution
Wal-Mart Stores, Inc. : Income Statement Evolution
More Financials
Dynamic quotes  
ON
| OFF