While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Dollar Tree, Inc. (NASDAQ:DLTR).
Dollar Tree, Inc. (NASDAQ:DLTR) was in 42 hedge funds’ portfolios at the end of June. The all time high for this statistic is 65. DLTR has experienced an increase in enthusiasm from smart money of late. There were 41 hedge funds in our database with DLTR holdings at the end of March. Our calculations also showed that DLTR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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Glenn Greenberg of Brave Warrior Capital
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Do Hedge Funds Think DLTR Is A Good Stock To Buy Now?
At Q2’s end, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DLTR over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Dollar Tree, Inc. (NASDAQ:DLTR) was held by Akre Capital Management, which reported holding $357 million worth of stock at the end of June. It was followed by Rivulet Capital with a $226.2 million position. Other investors bullish on the company included Arrowstreet Capital, Brave Warrior Capital, and East Side Capital (RR Partners). In terms of the portfolio weights assigned to each position Rivulet Capital allocated the biggest weight to Dollar Tree, Inc. (NASDAQ:DLTR), around 12.81% of its 13F portfolio. East Side Capital (RR Partners) is also relatively very bullish on the stock, designating 9.1 percent of its 13F equity portfolio to DLTR.
With a general bullishness amongst the heavyweights, some big names have jumped into Dollar Tree, Inc. (NASDAQ:DLTR) headfirst. East Side Capital (RR Partners), managed by Steven Richman, established the most valuable position in Dollar Tree, Inc. (NASDAQ:DLTR). East Side Capital (RR Partners) had $84.6 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $18.2 million investment in the stock during the quarter. The following funds were also among the new DLTR investors: Gregg Moskowitz’s Interval Partners, Anthony Joseph Vaccarino’s North Fourth Asset Management, and Joseph Samuels’s Islet Management.
Let’s also examine hedge fund activity in other stocks similar to Dollar Tree, Inc. (NASDAQ:DLTR). These stocks are NovoCure Limited (NASDAQ:NVCR), W.W. Grainger, Inc. (NYSE:GWW), CNH Industrial NV (NYSE:CNHI), Trip.com Group Limited (NASDAQ:TCOM), MongoDB, Inc. (NASDAQ:MDB), CGI Inc. (NYSE:GIB), and The Clorox Company (NYSE:CLX). This group of stocks’ market caps resemble DLTR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NVCR | 25 | 500806 | 3 |
| GWW | 29 | 221218 | -1 |
| CNHI | 24 | 680613 | 1 |
| TCOM | 41 | 1997956 | 6 |
| MDB | 44 | 1693975 | -2 |
| GIB | 14 | 252456 | -1 |
| CLX | 37 | 980009 | -1 |
| Average | 30.6 | 903862 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $904 million. That figure was $1380 million in DLTR’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 14 bullish hedge fund positions. Dollar Tree, Inc. (NASDAQ:DLTR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DLTR is 72.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately DLTR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DLTR were disappointed as the stock returned -1.5% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Dollar Tree Inc. (NASDAQ:DLTR)
Follow Dollar Tree Inc. (NASDAQ:DLTR)
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Disclosure: None. This article was originally published at Insider Monkey.
