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Why Did Warren Buffett Sell Nearly His Entire Stake in Wal-Mar (WMT)?

Wal-mart Stores Inc (WMT)

Legendary investor Warren Buffett has reduced his stake in Wal-Mart Stores Inc (NYSE:WMT) by around 90%, according to a new 13F filing.

The regulatory document, filed by Buffett’s Berkshire Hathaway with the Securities and Exchange Commission, discloses that the investor sold 11.58 million shares of the U.S. largest traditional retailer during the fourth quarter of 2016.

Buffett’s firm now owns 1.39 million shares valued at over $96 million, according to the filing.

Wal-Mart Faces Stiff Competition in E-Commerce Market

Wal-Mart has been facing an intensifying from Amazon and other online competitors.

Amazon’s market value stands at $356 billion, compared to Wal-Mart’s $298 billion, according to a report from Business Insider.

Shares of Wal-Mart have dropped 21% since the end of 2014, compared with a jump of 119% in the Amazon stock.

Meanwhile, Wal-Mart’s online sales were $13.7 billion in 2015, compared with Amazon’s $107 billion.

However, Wal-Mart is still ahead in overall sales with $482 billion, more than four times as much as Amazon’s revenue.

Last year, Wal-Mart CEO Doug McMillon urged the company’s associates and shareholders to “reimagine retail again.”

To expand its online presence, the retailer has been spending billions. As part of its efforts to reimagine retail again, the company is improving its online shopping system and delivery service.

The online data shows that Wal-Mart website is the most visited e-commerce website after Amazon.com.

Former Wal-Mart Mike Duke believes that the company should have invested more in e-commerce to better compete with Amazon.

In 2012, Duke said that his biggest regret as CEO was not investing more in e-commerce to better compete with Amazon, according to Business Insider.

“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,” Duke said. “Right now we’re making tremendous progress, and the business is moving, but we should have moved faster to expand this area.”

What Did Buffett Drop Wal-Mart Stake

Wal-Mart was the favorite company of Buffett.

Wal-mart Stores Inc (WMT)

There is no word from the legendary investor on why he sold the stake in the retailer. Last year, he acknowledged that Amazon is giving a tough time to traditional brick-and-mortar retailers.

“It is a big, big force, and it has already disrupted plenty of people, and it will disrupt more,” Buffett told shareholders in 2016, according to Bloomberg.

According to the Buffett, Amazon’s competitors, “including us [I think he was mentioning Wal-Mart] in a few areas, have not figured the way to either participate in it or to counter it.”

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