Could Berkshire Hathaway's sale of Walmart stocks be the start of the demise for the traditional retailer?
Warren Buffet sells off his shares in Walmart, as they struggle to keep up with e-commerce giants Amazon
by Abi Moses on 15th February, 2017
Warren Buffet's Berkshire Hathaway have been incredibly active in the stock market recently, with their major investment in several airlines coming on the back of the sale of the majority of their shares in Walmart.
The sale of almost $900m worth of Walmart stock has left Buffet with almost no shares in Walmart, in a move that highlights the difficulties the US' largest traditional retailer is experiencing in keeping up with online competitors, including e-commerce giants, Amazon.
Since the end of 2014, Amazon have enjoyed a 119% jump in their share price, whilst Walmart shares have fallen by 21% in the same time.
Upon his retirement in, former Walmart CEO, Mike Duke, said his biggest regret was not investing more in e-commerce in order to compete with Amazon. Speaking in 2012, he said "I wish we had moved faster. We've proven ourselves to be successful in many areas, and I simply wonder why we didn't move more quickly. This is especially true for e-commerce. Right now we're making tremendous progress, and the business is moving, but we should have moved faster to expand this area."
Although Walmart have since invested billions in e-commerce, its online sales in 2015 were a long way short of those recorded by Amazon – posting sales of $13.7bn compared to Amazon's $107bn. Many feel they were too slow to react and will never catch up.
The share sale by Berkshire Hathaway would certainly suggest that they believe that to be the case. The capital generated by their Walmart stock sale has been reinvested in several airlines – buying 43.2m shares in Southwest Airlines, valued at $2.15bn and also increasing its stake in Delta Airlines by 848%, its 60 million shares are now worth $2.95bn.
Buffet has also invested in American Airlines stocks, despite calling the sector "a deathtrap for investors" during the 2013 annual shareholder meeting at Berkshire.
As well as the airline stocks added to their portfolio, the most valuable holdings at Berkshire Hathaway include Kraft Heinz, Coca Cola, IBM, Wells Fargo and American Express. Along with the increase in Apple shares, Berkshire enjoyed an excellent fourth quarter when their portfolio gained 15%.
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