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This Metric Says You Are Smart to Buy Dollar General Corp. (DG)

Dollar General Corp. (NYSE:DG) was in 61 hedge funds’ portfolio at the end of March. DG investors should pay attention to an increase in hedge fund interest in recent months. There were 47 hedge funds in our database with DG positions at the end of the previous quarter.

Dollar General Corp. (NYSE:DG)

To the average investor, there are tons of methods market participants can use to analyze Mr. Market. Two of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the top money managers can beat the broader indices by a superb amount (see just how much).

Equally as integral, positive insider trading sentiment is a second way to break down the marketplace. Just as you’d expect, there are lots of reasons for a bullish insider to downsize shares of his or her company, but only one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this strategy if shareholders understand where to look (learn more here).

Consequently, let’s take a gander at the key action surrounding Dollar General Corp. (NYSE:DG).

How have hedgies been trading Dollar General Corp. (NYSE:DG)?

In preparation for this quarter, a total of 61 of the hedge funds we track were bullish in this stock, a change of 30% from one quarter earlier. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially.

Of the funds we track, Lone Pine Capital, managed by Stephen Mandel, holds the most valuable position in Dollar General Corp. (NYSE:DG). Lone Pine Capital has a $720.5 million position in the stock, comprising 3.7% of its 13F portfolio. Coming in second is Eton Park Capital, managed by Eric Mindich, which held a $308 million position; 6.2% of its 13F portfolio is allocated to the company. Other hedgies that hold long positions include Daniel S. Och’s OZ Management, Bain Capital’s Brookside Capital and Chase Coleman and Feroz Dewan’s Tiger Global Management LLC.

As industrywide interest jumped, some big names were breaking ground themselves. Tiger Global Management LLC, managed by Chase Coleman and Feroz Dewan, created the largest position in Dollar General Corp. (NYSE:DG). Tiger Global Management LLC had 269.6 million invested in the company at the end of the quarter. Jason Capello’s Merchants’ Gate Capital also made a $173.7 million investment in the stock during the quarter. The other funds with brand new DG positions are Keith Meister’s Corvex Capital, Christopher Medlock James’s Partner Fund Management, and Brian Jackelow’s SAB Capital Management.

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

Bullish insider trading is at its handiest when the company in question has experienced transactions within the past six months. Over the last half-year time frame, Dollar General Corp. (NYSE:DG) has experienced 2 unique insiders buying, and 9 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to Dollar General Corp. (NYSE:DG). These stocks are PriceSmart, Inc. (NASDAQ:PSMT), Costco Wholesale Corporation (NASDAQ:COST), Target Corporation (NYSE:TGT), Family Dollar Stores, Inc. (NYSE:FDO), and Dollar Tree, Inc. (NASDAQ:DLTR). This group of stocks belong to the discount, variety stores industry and their market caps match DG’s market cap.

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