Dollar General Corp. (NYSE:DG): Are Hedge Funds Right About This Stock?

Dollar General Corp. (NYSE:DG) has seen a decrease in activity from the world's largest hedge funds lately.

Earnings Analysis: Dollar General Corp. (NYSE:DG)

In the 21st century investor’s toolkit, there are tons of metrics market participants can use to track stocks. Some of the most under-the-radar are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best money managers can trounce their index-focused peers by a solid amount (see just how much).

Equally as important, bullish insider trading sentiment is a second way to break down the world of equities. Obviously, there are many stimuli for an executive to cut shares of his or her company, but just one, very simple reason why they would buy. Various empirical studies have demonstrated the useful potential of this method if "monkeys" know what to do (learn more here).

Consequently, let's take a glance at the key action regarding Dollar General Corp. (NYSE:DG).

Hedge fund activity in Dollar General Corp. (NYSE:DG)

At the end of the fourth quarter, a total of 44 of the hedge funds we track held long positions in this stock, a change of -19% from one quarter earlier. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings substantially.

According to our comprehensive database, Lone Pine Capital, managed by Stephen Mandel, holds the largest position in Dollar General Corp. (NYSE:DG). Lone Pine Capital has a $588 million position in the stock, comprising 3.7% of its 13F portfolio. Sitting at the No. 2 spot is Eton Park Capital, managed by Eric Mindich, which held a $287 million position; the fund has 6% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include James Crichton and Adam Weiss's Scout Capital Management, Bain Capital's Brookside Capital and Lee Ainslie's Maverick Capital.

Seeing as Dollar General Corp. (NYSE:DG) has experienced falling interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of funds who were dropping their entire stakes heading into 2013. It's worth mentioning that Brian Jackelow's SAB Capital Management dumped the largest position of the 450+ funds we watch, comprising about $159 million in stock.. Anand Parekh's fund, Alyeska Investment Group, also cut its stock, about $105 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 10 funds heading into 2013.

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

Insider trading activity, especially when it's bullish, is at its handiest when the company in focus has experienced transactions within the past six months. Over the last six-month time period, Dollar General Corp. (NYSE:DG) has seen 2 unique insiders buying, and 11 insider sales (see the details of insider trades here).

With the results shown by Insider Monkey's tactics, retail investors must always watch hedge fund and insider trading sentiment, and Dollar General Corp. (NYSE:DG) applies perfectly to this mantra.

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Insider Monkey's small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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