Dollar General Corp. (NYSE:DG) shares have gained more than 2% so far today after the discount retailer reported its first quarter results. For the quarter, Dollar General beat earnings estimates with earnings of $1.03 per share, versus the consensus of $0.95 per share. Revenue came in $10 million below expectations at $5.27 billion. Nevertheless, the report is rather strong, with total sales up 7.1% year-over-year, same store sales up 2.2% year-over-year, and operating margin rising 42 basis points. The company also returned $300 million of capital back to shareholders thorugh a combination of 2.7 million shares repurchased and the quarterly dividend payouts.
Dollar General Corp. (NYSE:DG) has seen an increase in support from the world’s most elite money managers of late and heading into the second quarter of 2016, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, up by 13% from one quarter earlier.
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If you’d ask most traders, hedge funds are seen as slow, old investment tools of the past. While there are more than 8000 funds in operation at present, We look at the crème de la crème of this group, around 700 funds. It is estimated that this group of investors shepherd most of the smart money’s total capital, and by following their matchless picks, Insider Monkey has formulated a number of investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s take a glance at the new action regarding Dollar General Corp. (NYSE:DG).
According to Insider Monkey’s hedge fund database, Orbis Investment Management, managed by William B. Gray, holds the number one position in Dollar General Corp. (NYSE:DG). Orbis Investment Management has a $195.1 million position in the stock, comprising 1.3% of its 13F portfolio. Sitting at the No. 2 spot is Alkeon Capital Management, led by Panayotis Takis Sparaggis, holding a $146.9 million position; the fund has 3% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise Israel Englander’s Millennium Management and Glenn Russell Dubin’s Highbridge Capital Management.
Since the number of funds long Dollar General went up during the first quarter, let’s take a look at some funds that initiated stakes during the first three months of 2016. Moreover, at the end of this article we will also compare DG to other stocks, including Deere & Company (NYSE:DE), Tyson Foods, Inc. (NYSE:TSN), and Applied Materials, Inc. (NASDAQ:AMAT) to get a better sense of its popularity.
Consequently, some big names were breaking ground themselves. MD Sass, managed by Martin D. Sass, initiated the most outsized position in Dollar General Corp. (NYSE:DG). MD Sass had $63.8 million invested in the company at the end of the quarter. Josh Resnick’s Jericho Capital Asset Management also initiated a $42.2 million position during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Ben Gambill’s Tiger Eye Capital, and Will Snellings’s Marianas Fund Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Dollar General Corp. (NYSE:DG) but similarly valued. We will take a look at Deere & Company (NYSE:DE), Tyson Foods, Inc. (NYSE:TSN), Applied Materials, Inc. (NASDAQ:AMAT), and Synchrony Financial (NYSE:SYF). All of these stocks’ market caps match DG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DE | 30 | 3468066 | 2 |
| TSN | 40 | 2000661 | 3 |
| AMAT | 39 | 963680 | -2 |
| SYF | 67 | 3454602 | -15 |
As you can see these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $2.47 billion. That figure was $1.11 billion in DG’s case. Synchrony Financial (NYSE:SYF) is the most popular stock in this table. On the other hand Deere & Company (NYSE:DE) is the least popular one with only 30 bullish hedge fund positions. Dollar General Corp. (NYSE:DG) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SYF might be a better candidate to consider a long position.
Disclosure: None
