Does Dollar Tree, Inc. (NASDAQ:DLTR) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Dollar Tree, Inc. (NASDAQ:DLTR) a healthy stock for your portfolio? Money managers are becoming hopeful. The number of bullish hedge fund bets inched up by 5 recently. Our calculations also showed that DLTR isn’t among the 30 most popular stocks among hedge funds. DLTR was in 53 hedge funds’ portfolios at the end of the third quarter of 2018. There were 48 hedge funds in our database with DLTR positions at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a peek at the new hedge fund action surrounding Dollar Tree, Inc. (NASDAQ:DLTR).
How are hedge funds trading Dollar Tree, Inc. (NASDAQ:DLTR)?
At Q3’s end, a total of 53 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. On the other hand, there were a total of 49 hedge funds with a bullish position in DLTR at the beginning of this year. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Akre Capital Management held the most valuable stake in Dollar Tree, Inc. (NASDAQ:DLTR), which was worth $414.8 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $154.4 million worth of shares. Moreover, Millennium Management, Rivulet Capital, and Glenview Capital were also bullish on Dollar Tree, Inc. (NASDAQ:DLTR), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers have jumped into Dollar Tree, Inc. (NASDAQ:DLTR) headfirst. Rivulet Capital, managed by Barry Lebovits and Joshua Kuntz, initiated the most outsized position in Dollar Tree, Inc. (NASDAQ:DLTR). Rivulet Capital had $115.9 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also initiated a $97.6 million position during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, Keith Meister’s Corvex Capital, and Michael Pausic’s Foxhaven Asset Management.
Let’s now review hedge fund activity in other stocks similar to Dollar Tree, Inc. (NASDAQ:DLTR). We will take a look at Ventas, Inc. (NYSE:VTR), Dell Technologies Inc. (NASDAQ:DVMT), The Clorox Company (NYSE:CLX), and iQIYI, Inc. (NASDAQ:IQ). This group of stocks’ market caps resemble DLTR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VTR | 15 | 224805 | 0 |
| DVMT | 61 | 6285474 | -5 |
| CLX | 22 | 999862 | 12 |
| IQ | 17 | 300499 | 0 |
| Average | 28.75 | 1952660 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.95 billion. That figure was $1.89 billion in DLTR’s case. Dell Technologies Inc. (NASDAQ:DVMT) is the most popular stock in this table. On the other hand Ventas, Inc. (NYSE:VTR) is the least popular one with only 15 bullish hedge fund positions. Dollar Tree, Inc. (NASDAQ:DLTR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DVMT might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
