Wal-Mart's Double Standard
Any company scrutinized enough won't pass the "social" test.
I talked to two friends of mine, both are money managers. Their firms will not buy Wal-Mart (WMT) because they're afraid clients will be upset with them. One of the firms is located in Boulder - so that unwillingness to own WMT makes sense, as Boulder is a socialistic Californian city disguised by the Rocky Mountains (did I just call Californians socialists?). But the other manager's firm manages north of four billion dollars and has several mutual funds. This leads me to believe that the headline noise about Wal-Mart's immorality may force it into the "immoral investment class," where money managers may be dropping the name from their portfolios due to client pressure, thus creating a buying opportunity in the shares.
I also had a client call me yesterday asking if I really believed in what I wrote about WMT, referring to the Wal-Mart - "Capitalist Pig" article. He could not believe that I meant every word; he thought I was just being "provocative."
I really do believe that Wal-Mart is an incredible company and I don't feel that it is committing any immoral acts. It is a retailer that is very good at what it does. Its only fault is that it is extremely successful; becoming the largest retailer in the U.S. and in the world. Its sheer size attracts the criticism, which has nothing to do with Wal-Mart but has to do with realities of capitalism, i.e. poverty of the lower classes, high medical costs and inability to afford health insurance etc... We don't hear anybody discuss smaller retailers, i.e. Dollar General (DG), Family Dollar (FDO) and other businesses that pay minimum wage to their employees (Wal-Mart actually pays almost double the minimum wage) and don't provide health insurance. It seems that there is a double standard by which Wal-Mart is judged upon.
Investors that have a social investing gene in them would be more upset about owning WMT than about owning a liquor company. My view on social investing is very simple: it is an oxymoron. Investing is done to make money. Any company scrutinized enough won't pass the "social" test. It is hard enough finding good investments, adding another very subjective criteria to the mix only makes it more difficult.
This is what Larry the Liquidator said about social investing:
"Take the money. Invest it somewhere else. Maybe, maybe you'll get lucky and it'll be used productively. And if it is, you'll create new jobs and provide a service for the economy and, God forbid, even make a few bucks for yourselves. And if anybody asks, tell 'em ya gave at the plant."
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