Billionaire Stephen Mandel’s Q1 Trades Included Buying News Corp (NWSA)

Still likes retail. Once again three of Mandel’s eight largest holdings are retailers- this quarter we have two dollar stores (Dollar General Corp. (NYSE:DG) and Dollar Tree, Inc. (NASDAQ:DLTR)) and The Gap Inc. (NYSE:GPS). The dollar stores stand out for having very limited exposure to the broader economy, with each carrying a beta of 0.1. Dollar General Corp. (NYSE:DG) and Dollar Tree, Inc. (NASDAQ:DLTR) also grew their earnings in their most recent quarter compared to the same period in the previous fiscal year, though Dollar Tree, Inc. (NASDAQ:DLTR) did considerably better with 22% earnings growth (driven mostly by higher sales). Their trailing P/Es are in the 18-19 range, so these valuations are dependent on future improvements. The Gap Inc. (NYSE:GPS), which is up 51% in the last year, trades at about the same level relative to trailing earnings. It experienced double-digit growth rates in revenue and net income over the same time frame that the dollar stores did well.

All five of the stocks we’ve covered here are doing well in business terms. Neither News Corp (NASDAQ:NWSA) nor the retailers is a classic value stock, given their P/E multiples, but there’s at least some potential for each of these stocks which Mandel and his team like. News Corp (NASDAQ:NWSA), of course, has the additional catalyst of the breakup; between that factor and the secular trends in its financials it’s certainly of interest to us. The dollar stores could be of particular interest to investors trying to make their portfolios more defensive, and Dollar Tree has certainly been doing well enough going by its 10-K that it might be worth its premium to the larger discount retailers. The Gap Inc. (NYSE:GPS) might also be worth looking into to see how the company can sustain its current performance.

Disclosure: I own no shares of any stocks mentioned in this article.