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Why Dollar Tree, Inc. (DLTR)’s Stock Surged on Thursday?

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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To most market participants, hedge funds are assumed to be slow, outdated investment vehicles of the past.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.

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