No. of Recommendations: 34
With out of those 5 the loser being Carmax and enormous amounts on Dollar Tree and Alphabet, I had a closer look how itīs possible that Dollar General was either your third big winner or flat, as Dollar General is heavily down since the recommendations.
DG has been a modest winner overall for me, though not huge like Dollar Tree which I started trading many years earlier. It has never been a very large portfolio allocation, but the current aggregate profit is around 4% of my average long portfolio size since I first opened a position. I've been long a total of about 42 months. I haven't calculated the IRR, but I presume it's not very good.
It's certainly true that many of the bullish noises I made were dead wrong. I guess I separate the commentary into two categories.
The first is the reliability and trajectory of the business, which was excellent for a very long time, and which was the impetus for my mentioning it. For a while it was a good comment, and I think it was worth mentioning. But as you note, at some point that wasn't the same as a good investment case going forward, as the business results then turned down a lot around 2024. I definitely didn't see that coming, as they had sailed through previous financial turbulence without a blip. In fact I'm still not sure what mix of factors has caused the weakness.
e.g., ROE averaged 30% 2016-2023, and has averaged 17% since.
ROA averaged 19% 2016-2023, and has averaged 12% since.
Sales per share are still up 9%/year in the last ~5 years, but that growth hasn't been turning into profit as well as it once did: net profit margins have halved. It's hard to say whether that's transient or permanent.
The second thing, sometimes quite separate, is the trading of the securities of that underlying business. Indeed, the thing that I particularly *like* about the dollar store stocks (and that many other people dislike) is that their valuations are all over the map. They go in and out of fashion frequently. Normally in any two year window the business has chugged along steadily, but the high price is twice the low price. I like to buy low, sell higher, and repeat.
So the reason I've made a profit overall is mainly because of the swing trading, even though the stock today is 40% lower than when I opened my first position.
I started with DG in Feb 2022 when the price was $190ish, buying some call options. That was closed fairly quickly for a solid profit in June 2022 (price rose about $40/share).
I restarted in Q3 2023, a poor entry with hindsight, and in September I posted that I thought it was an excellent entry at around $115. That seemed a good call only for about 6 months as the price rose to about $166 then rolled over...the business starting having problems, as did the price. At its worst, the fall was about -70% from the high. So, a very bad call for a medium-long hold which was the intent.
The price was very low from September 2024 to May 2025, mostly in the $70-95 range. I was underwater for that stretch. I closed a whole lot in March 25 at a substantial loss, part of my general divestment from US securities, so for reasons unrelated to valuation. This was one of the few tickers I didn't completely exit. I did a few modest trades during the low-price stretch.
I sold most of my position at around $152 this Feb/Mar for a nice profit.
Just a few weeks ago I thought the price looked to be at the lower end of the likely range, so I added some long derivatives when the stock was around $105.
So, I definitely misread the chances of a material business downturn, definitely made some bad commentary, and definitely got some bad entries myself, and also had a "forced" sale at a low price. But it worked out...adequately. I expect prices meaningfully over $150 in the not too distant future, and I'll probably close it permanently at some point before it hits $200. My dollar store investments are mostly in Canada now. My Canadian portfolio and my European portfolio are each now 2-3 times as much as my non-BRK US positions.
Jim
