Israel “Izzy” Englander is a billionaire portfolio manager and CEO of the hedge fund Millennium Management. According to Millennium’s latest 13F filing, the UK fund sold 8.1 million shares Walmart(NYSE:WMT) during the third quarter.
So what? Consider the fact that the fund has consistently increased its position in Walmart over the past three quarters.
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At first, I was a little perplexed as to why Englander now decided to reduce the fund’s position in Walmart. However, after careful thought and consideration, I think this decision makes sense.
Below, I outline how Walmart has performed in recent years and explain why selling the stock now could be a smart move.
The past few years have been challenging for physical retail. Inflation reached its highest level in decades, effectively forcing the Federal Reserve to implement a number of aggressive rate hikes. The one-two punch of rising costs and high interest rates made consumers more price-conscious – and retailers were vulnerable to these trends.
One retailer that has done well during this period of macroeconomic challenges is Walmart. The table below shows Walmart’s same-store sales trends over the past year for its various locations:
Overall, Walmart has been able to consistently grow same-store sales across geographic regions over the past year. It’s likely that the main reason consumers continue to return to Walmart is the price value. According to company management, much of the growth is due to increased transactions and average ticket orders.
In other words, Walmart’s growth isn’t driven by the costs of inflation being passed on to shoppers. Instead, the company can compete with other retailers on price, enticing shoppers to keep coming back and spending more.
Image source: Getty Images.
The chart below measures Walmart’s stock price and US inflation over the past three years. While it’s clear that Walmart stock has been a strong performer, the stock price has shifted into a whole new gear as inflation continues to decline.
WMT Total Return Level data per YCharts.
Over the past three years, Walmart has achieved a total return of 93%, almost triple that of the S&P500. Furthermore, as I write this, Walmart’s split stock price of $89.67 is just a penny away from an all-time high.
If Englander was optimistic about the economy and thought inflation would continue to decline, wouldn’t he want to continue holding his Walmart position? Well, it might not be that simple.
I don’t think England’s views on the economy (good or bad) have anything to do with Millennium’s decision to reduce its stake in Walmart. I think the fund is capturing some of the gains as Walmart stock has clearly been on the run for quite some time.
Although Walmart is well positioned in the retail environment, competition will become more intense as the holiday season approaches. While Walmart’s latest financial guidance was encouraging, I wouldn’t want to hold the stock knowing that other popular stores like Amazon And Goalare going to bring the heat during the holidays.
Don’t just take my word for it. According to Millennium’s latest 13F, England’s biggest sales in the third quarter included none other than Amazon, as well Apple — two other darlings in the consumer space. In turn, some of the fund’s largest purchases occurred last quarter Microsoft, SpotifyAnd Eli Lilly.
Millennium is likely opting to move away from defensive stocks like Walmart and rebalance its portfolio in favor of more high-growth opportunities in areas like artificial intelligence (AI) and healthcare.
Consider the following before buying stock in Walmart:
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions at Amazon, Apple, Eli Lilly and Microsoft. The Motley Fool holds positions in and recommends Amazon, Apple, Microsoft, Spotify Technology, Target and Walmart. The Motley Fool recommends the following options: long January 2026 $395 calls to Microsoft and short January 2026 $405 calls to Microsoft. The Motley Fool has a disclosure policy.
Does billionaire Israel Englander know something Wall Street doesn’t? The billionaire investor just sold 8.1 million shares of Walmart stock. was originally published by The Motley Fool
