Is Dollar Tree, Inc. (NASDAQ:DLTR) Going to Burn These Hedge Funds?

Dollar Tree, Inc. (NASDAQ:DLTR) has experienced an increase in support from the world’s most elite money managers of late.

In the eyes of most shareholders, hedge funds are perceived as underperforming, old investment vehicles of the past. While there are more than 8000 funds with their doors open at the moment, we look at the masters of this group, close to 450 funds. It is widely believed that this group controls the lion’s share of the hedge fund industry’s total asset base, and by tracking their top equity investments, we have revealed a few investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

Equally as beneficial, positive insider trading activity is a second way to break down the stock market universe. There are lots of stimuli for a corporate insider to drop shares of his or her company, but only one, very clear reason why they would buy. Various empirical studies have demonstrated the useful potential of this strategy if shareholders know where to look (learn more here).

Keeping this in mind, it’s important to take a look at the recent action regarding Dollar Tree, Inc. (NASDAQ:DLTR).

What have hedge funds been doing with Dollar Tree, Inc. (NASDAQ:DLTR)?

At the end of the fourth quarter, a total of 39 of the hedge funds we track held long positions in this stock, a change of 8% from the third quarter. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully.

According to our comprehensive database, Stephen Mandel’s Lone Pine Capital had the largest position in Dollar Tree, Inc. (NASDAQ:DLTR), worth close to $479 million, accounting for 3% of its total 13F portfolio. Sitting at the No. 2 spot is John Griffin of Blue Ridge Capital, with a $264 million position; the fund has 3.7% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Eric Mindich’s Eton Park Capital, Christian Leone’s Luxor Capital Group and Jim Simons’s Renaissance Technologies.

As industrywide interest jumped, key money managers were breaking ground themselves. Eton Park Capital, managed by Eric Mindich, assembled the most outsized position in Dollar Tree, Inc. (NASDAQ:DLTR). Eton Park Capital had 183 million invested in the company at the end of the quarter. Christian Leone’s Luxor Capital Group also initiated a $130 million position during the quarter. The other funds with brand new DLTR positions are Jonathon Jacobson’s Highfields Capital Management, Patrick McCormack’s Tiger Consumer Management, and Michael Lowenstein’s Kensico Capital.

Insider trading activity in Dollar Tree, Inc. (NASDAQ:DLTR)

Insider buying is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the latest half-year time frame, Dollar Tree, Inc. (NASDAQ:DLTR) has experienced 1 unique insiders buying, and 1 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned research, everyday investors should always watch hedge fund and insider trading activity, and Dollar Tree, Inc. (NASDAQ:DLTR) is no exception.

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