Yesterday Wal-Mart (NYSE:WMT) reported its earnings, beat by a penny and confused everyone with its convoluted Forex laced guidance for the fourth quarter. (Call Transcript) I have been quite public in expressing my opinion that WMT would be a victim of Obama policies. In particular, I am worried about potential anti-trust efforts to break up WMT as well and the impact of the Employee Free Choice Act.
However, Andrew Ross Sorkin had a very interesting article in Tuesday’s New York Times. In the article he discusses a conversation that he had with David Boies, a prominent attorney who was hired by Washington to “bust up” Microsoft (NASDAQ:MSFT) in the 1990s. Boies is of the opinion that Obama would not take an active antitrust stance in his first two years of office.
I agree. I think that given the state of the economy that Obama is going to be far less socialist in his policies in the early part of his administration. As a result, I am going to back off on my concerns for WMT in the near future. Though WMT will get a reprieve on the antitrust front, I expect that to be short lived. The bigger issue on the labor front could be a more immediate problem for WMT.
Benefiting WMT in the short run will be the continued trading down by consumers of all income levels. Thus, WMT could be a good investment for the first two years of Obama’s presidency but after such time the festering issues I described could begin to surface and turn WMT into a great short.