We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article, we look at what those funds think of Dollar Tree, Inc. (NASDAQ:DLTR) based on that data.
Is Dollar Tree, Inc. (NASDAQ:DLTR) a bargain? Prominent investors were selling. The number of long hedge fund bets decreased by 12 in recent months. Dollar Tree, Inc. (NASDAQ:DLTR) was in 41 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 65. Our calculations also showed that DLTR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 53 hedge funds in our database with DLTR holdings at the end of December.
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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 the end of March, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in DLTR over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Akre Capital Management was the largest shareholder of Dollar Tree, Inc. (NASDAQ:DLTR), with a stake worth $411 million reported as of the end of March. Trailing Akre Capital Management was Rivulet Capital, which amassed a stake valued at $228.9 million. Brave Warrior Capital, Renaissance Technologies, and Kensico Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rivulet Capital allocated the biggest weight to Dollar Tree, Inc. (NASDAQ:DLTR), around 12.41% of its 13F portfolio. KG Funds Management is also relatively very bullish on the stock, dishing out 8.38 percent of its 13F equity portfolio to DLTR.
Seeing as Dollar Tree, Inc. (NASDAQ:DLTR) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few funds that slashed their entire stakes in the first quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors sold off the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $61.5 million in stock, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital was right behind this move, as the fund dropped about $33.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 12 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Dollar Tree, Inc. (NASDAQ:DLTR) but similarly valued. We will take a look at Equity Residential (NYSE:EQR), Keysight Technologies Inc (NYSE:KEYS), Fifth Third Bancorp (NASDAQ:FITB), Weyerhaeuser Co. (NYSE:WY), SVB Financial Group (NASDAQ:SIVB), MPLX LP (NYSE:MPLX), and CBRE Group, Inc. (NYSE:CBRE). This group of stocks’ market valuations resemble DLTR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQR | 23 | 359416 | -5 |
| KEYS | 32 | 529652 | 5 |
| FITB | 38 | 401275 | -5 |
| WY | 38 | 641353 | -2 |
| SIVB | 49 | 1213261 | 18 |
| MPLX | 8 | 136195 | -5 |
| CBRE | 30 | 2600509 | -1 |
| Average | 31.1 | 840237 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $840 million. That figure was $1687 million in DLTR’s case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 8 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 52.2. 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 17.4% in 2021 through June 18th and beat the market again by 6.1 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 -12.4% since the end of March (through 6/18) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
