Madison Investments, an investment advisor, released its “Madison Mid Cap Fund” third-quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund (Class Y) returned -1.8% compared to a -4.7% decline for the Russell Midcap Index. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Madison Mid Cap Fund highlighted stocks like Dollar Tree, Inc. (NASDAQ:DLTR) in the third quarter 2023 investor letter. Headquartered in Chesapeake, Virginia, Dollar Tree, Inc. (NASDAQ:DLTR) is a discount retailer. On October 16, 2023, Dollar Tree, Inc. (NASDAQ:DLTR) stock closed at $110.10 per share. One-month return of Dollar Tree, Inc. (NASDAQ:DLTR) was 1.01%, and its shares lost 19.51% of their value over the last 52 weeks. Dollar Tree, Inc. (NASDAQ:DLTR) has a market capitalization of $24.223 billion.
Madison Mid Cap Fund made the following comment about Dollar Tree, Inc. (NASDAQ:DLTR) in its Q3 2023 investor letter:
“The bottom five detractors for the quarter were Dollar Tree, Inc. (NASDAQ:DLTR), MKS Instruments, CarMax, Floor & Décor, and Liberty Media- Formula One. The new management team at Dollar Tree is investing heavily to drive growth. While we are beginning to see some early signs of progress, including strong positive consumer traffic to their stores in the third quarter, these investments, combined with a challenging retail environment, are negatively impacting margins in the short run.
We added to Dollar Tree following the stock’s weakness in the quarter. Investors are concerned over weaker than expected margins, primarily caused by a mix shift to consumable products (versus higher margin discretionary products) and high theft (or inventory ‘shrink’). These dynamics have also been experienced by Dollar Tree’s closest peer, Dollar General, and broadly across the retail landscape. While certainly not favorable in the short term, we view these as natural cyclical aspects of the retail industry that won’t be sustained forever. However, more important to the long-term earnings power of the business, we are encouraged by some of the early results from the various initiatives management has in place. Namely, customer traffic has meaningfully increased at both the Dollar Tree and Family Dollar banners, driving solid market share gains and increased sales per square foot, which we believe to be one of the most important metrics to track the company’s progress. With these promising early results, we used the cloud of cyclical headwinds to opportunistically add to our position.”
A busy shopping aisle filled with discounted items in a retail store. Editorial photo for a financial news article. 8k. –ar 16:9
Dollar Tree, Inc. (NASDAQ:DLTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held Dollar Tree, Inc. (NASDAQ:DLTR) at the end of second quarter which was 38 in the previous quarter.
We discussed Dollar Tree, Inc. (NASDAQ:DLTR) in another article and shared the list of best depressed stocks to buy. In addition, please check out our hedge fund investor letters Q3 2023 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.
