Dollar Tree Inc

As inflation continued to push prices higher and the threat of tariffs introduced the threat of further price increases, dollar stores presented an excellent opportunity for investment. As the low-cost (and in some towns the 'only') provider at scale, both Dollar General and Dollar Tree can raise prices to increase both their top and bottom lines. We continue to hold DLTR—in addition to its ability to take price, the company is undergoing a transformational change with the Family Dollar spinoff.

Dollar Tree presents an excellent investment opportunity as it is positioned to raise prices in response to inflation, which will enhance both its top and bottom lines. The company is also undergoing a transformational change with the Family Dollar spinoff, which adds to its growth potential. Given the current economic environment, where dollar stores are becoming increasingly vital as low-cost providers, we believe Dollar Tree is well-positioned to capitalize on these trends.

Our recently increased position in Dollar Tree also contributed nicely to performance as same-store-sales growth recently inflected higher with solid underlying trends in customer traffic and ticket size. This indicates a positive shift in consumer behavior and suggests that Dollar Tree is well-positioned to capitalize on these trends moving forward.

We initiated a new investment in Dollar Tree during the first quarter, as the company’s announced divestiture of Family Dollar put shares back on our radar. We continue to see significant upside potential from the roll-out of higher price points, which should be much clearer to the market without the noise of a decade-long restructuring in the background. Subsequent to quarter-end, and 48 hours after 'Liberation Day,' we aggressively increased our position, as shares plummeted ~ 20% in the two days following the announcement.