Insiders and Billionaire Richard Chilton Like Dollar General Corp. (DG) and More

We track quarterly 13F filings from hundreds of hedge funds and other notable investors, including billionaire Richard Chilton’s Chilton Investment Company. We’ve found that the information in these filings is useful in terms of developing investing strategies; for example, we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). We also like to screen individual funds’ filings according to various criteria, including stocks seeing recent insider buying; our analysis of studies on insider trading shows that stocks bought by insiders narrowly outperform the market (read more about studies on insider trading). Here are Chilton’s five largest positions from the end of March with at least one insider buy in the last three months (or see the full list of stocks Chilton reported owning in the filing):

The fund had Dollar General Corp. (NYSE:DG) as its second largest holding by market value; we recorded a Board member buying the stock in April. The dollar store’s beta is 0.2, making it even less exposed to the broader economy than large discount retailers such as Target Corporation (NYSE:TGT) and Wal-Mart Stores, Inc. (NYSE:WMT). Dollar General Corp. (NYSE:DG) is valued at a premium to those peers, however, with a trailing P/E of 18, and its recent results have not been particularly strong. Billionaire Stephen Mandel’s Lone Pine Capital owned over 14 million shares according to that fund’s own 13F (check out Mandel’s stock picks).

Another retailer which Chilton liked and which has had an insider buy the stock recently is The Home Depot, Inc. (NYSE:HD). Home improvement stores such as Home Depot have been popular growth stocks as the housing market has picked up, with positive sentiment driving the valuation up to 25 times trailing earnings. Business picked up significantly in its fiscal Q1 (which ended in early May), however, and the stock may be worth watching for further developments. Renaissance Technologies, founded by billionaire Jim Simons, more than doubled the size of its Home Depot position last quarter (find Renaissance’s favorite stocks).