Dollar Tree, Inc. (NASDAQ:DLTR)’s shares have surged by over 12% since the beginning of 2016 on the back of the Virginia-based variety stores company reporting EPS of $0.89, better than the analysts’ estimates of $0.81. Revenue of $5.09 billion also topped the expectations of $5.08 billion. On a constant currency basis, same store sales increased by 3.4%. Bob Sasser, CEO of Dollar Tree, said that the company performed well in the quarter despite of the challenging economic environment. Mr. Sasser added that the company is off to a great start in 2016, and remains well on track with its integration of Family Dollar. For the second quarter, Dollar Tree sees its EPS between $0.66 and $0.72, versus the consensus estimate of $0.75.
Better-than-expected results signal good news for investors, especially since, the best stock pickers have been getting more optimistic. The number of bullish hedge fund bets improved by two during the first quarter and a total of 61 of the hedge funds tracked by Insider Monkey were long this stock at the end of March. At the end of this article we will also compare DLTR to other stocks including ConAgra Foods, Inc. (NYSE:CAG), Sasol Limited (ADR) (NYSE:SSL), and NVIDIA Corporation (NASDAQ:NVDA) to get a better sense of its popularity.
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To most market participants, hedge funds are assumed to be slow, outdated investment vehicles of the past. While there are over 8000 funds in operation at present, Our experts choose to focus on the top tier of this club, around 700 funds. Most estimates calculate that this group of people orchestrate bulk of the smart money’s total asset base, and by tracking their finest investments, Insider Monkey has identified numerous investment strategies that have historically surpassed the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.
When looking at the institutional investors followed by Insider Monkey, Stephen Mandel’s Lone Pine Capital has the number one position in Dollar Tree, Inc. (NASDAQ:DLTR), worth close to $957.1 million, corresponding to 4.8% of its total 13F portfolio. On Lone Pine Capital’s heels is Akre Capital Management, led by Charles Akre, which holds a $345.4 million position; 7.3% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish comprise Phill Gross and Robert Atchinson’s Adage Capital Management, Peter Adam Hochfelder’s Brahman Capital and Panayotis Takis Sparaggis’s Alkeon Capital Management.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. On the next page, we are going to take a look at some funds that initiated stakes in Dollar Tree during the first quarter.
Scopus Asset Management, managed by Alexander Mitchell, initiated the largest position in Dollar Tree, Inc. (NASDAQ:DLTR). Scopus Asset Management had $79.2 million invested in the company at the end of the quarter. Kamyar Khajavi’s MIK Capital also made a $57.3 million investment in the stock during the quarter. The following funds were also among the new DLTR investors: Gabriel Plotkin’s Melvin Capital Management, Eric Chen’s Antipodean Advisors, and Benjamin A. Smith’s Laurion Capital Management.
Let’s now review hedge fund activity in other stocks similar to Dollar Tree, Inc. (NASDAQ:DLTR). We will take a look at ConAgra Foods, Inc. (NYSE:CAG), Sasol Limited (ADR) (NYSE:SSL), NVIDIA Corporation (NASDAQ:NVDA), and TELUS Corporation (USA) (NYSE:TU). This group of stocks’ market valuations are closest to DLTR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAG | 39 | 2456325 | 3 |
| SSL | 11 | 1750830 | 4 |
| NVDA | 43 | 971417 | 2 |
| TU | 8 | 231864 | -2 |
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $1353 million. That figure was $4202 million in DLTR’s case. NVIDIA Corporation (NASDAQ:NVDA) is the most popular stock in this table. On the other hand TELUS Corporation (USA) (NYSE:TU) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Dollar Tree, Inc. (NASDAQ:DLTR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
