Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned 8.24% in the quarter compared to the Russell Midcap Value Index’s 10.1% return. Stock selection was positive in six of 11 sectors. The strategy outperformed the Russell Midcap Value Index over the last three and five years mostly due to security selection. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2024.
Heartland Mid Cap Value Fund highlighted stocks like Dollar General Corporation (NYSE:DG) in the Q3 2024 investor letter. Dollar General Corporation (NYSE:DG) is a discount retailer, that provides various merchandise products. The one-month return of Dollar General Corporation (NYSE:DG) was -4.61%, and its shares lost 27.97% of their value over the last 52 weeks. On October 11, 2024, Dollar General Corporation (NYSE:DG) stock closed at $82.49 per share with a market capitalization of $18.078 billion.
Heartland Mid Cap Value Fund stated the following regarding Dollar General Corporation (NYSE:DG) in its Q3 2024 investor letter:
“Consumer Staples. The convenience store operator Dollar General Corporation (NYSE:DG) was our worst performer during the quarter. The retailer, with more than 19,000 stores, 80% of which are in rural towns with populations of less than 20,000, recently slashed its 2024 earnings guidance, sparking a late-summer sell-off.
Same-store comparable sales and margin guidance were cut meaningfully, implying a significant slowdown in the second half of the year. While some of the troubles may be due to the financial challenges of its core customers, with average incomes of just $35,000, Dollar General is also losing market share because of Walmart’s initiative to reduce entry-level pricing. Management acknowledged a need to invest in promotions to stimulate demand, but they refute concerns that DG needs to invest more in store-level labor.
We exited the position and harvested the tax losses, but we continue to monitor the company’s fundamentals. We’re looking for comparable sales to stabilize driven by promotional activity, a boost in labor investments, and management to downsize store expansion plans to improve free cash flow generation and accelerate deleveraging efforts.”
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Dollar General Corporation (NYSE:DG) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Dollar General Corporation (NYSE:DG) at the end of the second quarter which was 49 in the previous quarter. Dollar General Corporation’s (NYSE:DG) net sales increased 4.2% in the second quarter of 2024 to $10.2 billion compared to net sales of $9.8 billion in Q2 2023. While we acknowledge the potential of Dollar General Corporation (NYSE:DG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Dollar General Corporation (NYSE:DG) and shared Jim Cramer’s list of stocks that finished dead last. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.