Is Five Below Inc (FIVE) a Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Five Below Inc (NASDAQ:FIVE) .

Five Below Inc (NASDAQ:FIVE) investors should be aware of an increase in support from the world’s most successful money managers recently. During the third quarter, the number of funds tracked by Insider Monkey long Five Below advanced by four to 17. At the end of this article we will also compare FIVE to other stocks including Brinker International, Inc. (NYSE:EAT), Papa John’s Int’l, Inc. (NASDAQ:PZZA), and PRA Health Sciences Inc (NASDAQ:PRAH) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, we’re going to analyze the key action regarding Five Below Inc (NASDAQ:FIVE).

What does the smart money think about Five Below Inc (NASDAQ:FIVE)?

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on Five Below, a change of 31% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in FIVE heading into 2016. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Michael R. Weisberg’s Crestwood Capital Management has the largest position in Five Below Inc (NASDAQ:FIVE), worth close to $23.6 million, amounting to 7% of its total 13F portfolio. On Crestwood Capital Management’s heels is Pacifica Capital Investments, led by Steve Leonard, which holds a $20.2 million position; the fund has 10.8% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish consist of David Keidan’s Buckingham Capital Management and Principal Global Investors’ Columbus Circle Investors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As aggregate interest increased, some big names were breaking ground themselves. Jim Simons’ Renaissance Technologies established the largest position in Five Below Inc (NASDAQ:FIVE). Renaissance Technologies had $8.2 million invested in the company at the end of the quarter. Mark Broach’s Manatuck Hill Partners also initiated a $5.5 million position during the quarter. The other funds with new positions in the stock are Bruce Kovner’s Caxton Associates LP, Ken Griffin’s Citadel Investment Group, and D. E. Shaw’s D E Shaw.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Five Below Inc (NASDAQ:FIVE) but similarly valued. These stocks are Brinker International, Inc. (NYSE:EAT), Papa John’s Int’l, Inc. (NASDAQ:PZZA), PRA Health Sciences Inc (NASDAQ:PRAH), and Tech Data Corp (NASDAQ:TECD). This group of stocks’ market caps resemble FIVE’s market cap.

As you can see these stocks had an average of 20 funds with bullish positions and the average amount invested in these stocks was $211 million. That figure was $107 million in FIVE’s case. PRA Health Sciences Inc (NASDAQ:PRAH) is the most popular stock in this table with 23 funds reporting long positions. On the other hand Papa John’s Int’l, Inc. (NASDAQ:PZZA) is the least popular one with only 14 investors holding shares. Five Below Inc (NASDAQ:FIVE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PRA Health Sciences Inc (NASDAQ:PRAH) might be a better candidate to consider taking a long position in.