This Metric Says You Are Smart to Buy Dollar General Corp. (DG)

Is Dollar General Corp. (NYSE:DG) a buy, sell, or hold? The best stock pickers are betting on the stock. The number of bullish hedge fund positions moved up by 14 lately.

In today’s marketplace, there are a multitude of indicators shareholders can use to watch publicly traded companies. Two of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top investment managers can beat the S&P 500 by a very impressive margin (see just how much).

Equally as key, positive insider trading sentiment is a second way to parse down the marketplace. As the old adage goes: there are a number of stimuli for an executive to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Various empirical studies have demonstrated the useful potential of this tactic if investors know what to do (learn more here).

Consequently, it’s important to take a look at the recent action encompassing Dollar General Corp. (NYSE:DG).

What have hedge funds been doing with Dollar General Corp. (NYSE:DG)?

At the end of the first quarter, a total of 61 of the hedge funds we track were long in this stock, a change of 30% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially.

Of the funds we track, Stephen Mandel’s Lone Pine Capital had the largest position in Dollar General Corp. (NYSE:DG), worth close to $720.5 million, accounting for 3.7% of its total 13F portfolio. Coming in second is Eric Mindich of Eton Park Capital, with a $308 million position; the fund has 6.2% of its 13F portfolio invested in the stock. Some other peers with similar optimism include Daniel S. Och’s OZ Management, Bain Capital’s Brookside Capital and Chase Coleman and Feroz Dewan’s Tiger Global Management LLC.

As aggregate interest increased, key hedge funds have jumped into Dollar General Corp. (NYSE:DG) headfirst. Tiger Global Management LLC, managed by Chase Coleman and Feroz Dewan, established the most valuable position in Dollar General Corp. (NYSE:DG). Tiger Global Management LLC had 269.6 million invested in the company at the end of the quarter. Jason Capello’s Merchants’ Gate Capital also initiated a $173.7 million position during the quarter. The other funds with new positions in the stock are Keith Meister’s Corvex Capital, Christopher Medlock James’s Partner Fund Management, and Brian Jackelow’s SAB Capital Management.

Insider trading activity in Dollar General Corp. (NYSE:DG)

Insider trading activity, especially when it’s bullish, is best served when the company in question has seen transactions within the past half-year. Over the last 180-day time frame, Dollar General Corp. (NYSE:DG) has seen 2 unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Dollar General Corp. (NYSE:DG). These stocks are PriceSmart, Inc. (NASDAQ:PSMT), Costco Wholesale Corporation (NASDAQ:COST), Target Corporation (NYSE:TGT), Family Dollar Stores, Inc. (NYSE:FDO), and Dollar Tree, Inc. (NASDAQ:DLTR). This group of stocks belong to the discount, variety stores industry and their market caps match DG’s market cap.