Today it was announced that Dollar General (DG) is considering a bid for Family Dollar (FDO). This recent indication only adds to the hype that has suddenly fallen upon FDO. On March 31, 2014, we wrote a Quick Take on Family Dollar that had the following conclusion:
“Investors interested in FDO could break their investment into at least two purchases, the first being 60% of the intended amount now and the second purchase of 40% at either of the two indicated support levels at $44.95 or $34.83.”
It appears that our indication to consider FDO at the $57.88 range was appropriate as the stock never reverted to any of the suggested downside targets and now trades at $77.47 or +33% higher. This is the second call in a row that FDO has delivered for us. FDO appeared on our watch list of February 17, 2013 which prompted our research and subsequent purchase on March 5, 2013. There is significant room for fine tuning which we will eventually examine going forward with these recommendations.
