How do we determine whether Five Below Inc (NASDAQ:FIVE) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Five Below Inc (NASDAQ:FIVE) investors should pay attention to a decrease in hedge fund sentiment in recent months. At the end of this article we will also compare FIVE to other stocks, including American Assets Trust, Inc (NYSE:AAT), Kemper Corporation (NYSE:KMPR), and InterDigital, Inc. (NASDAQ:IDCC) to get a better sense of its popularity.
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In today’s marketplace there are tons of signals stock market investors put to use to size up stocks. A duo of the most innovative signals are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite investment managers can trounce their index-focused peers by a superb margin (see the details here).
Keeping this in mind, we’re going to take a look at the key action encompassing Five Below Inc (NASDAQ:FIVE).
How have hedgies been trading Five Below Inc (NASDAQ:FIVE)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a fall of 40% from the second quarter. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Michael R. Weisberg’s Crestwood Capital Management has the number one position in Five Below Inc (NASDAQ:FIVE), worth close to $27.9 million, amounting to 4.9% of its total 13F portfolio. Coming in second is Columbus Circle Investors, managed by Clifford Fox, which holds a $27.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of David Keidan’s Buckingham Capital Management, Aaron Cowen’s Suvretta Capital Management and John Tompkins’s Tyvor Capital.
Due to the fact that Five Below Inc (NASDAQ:FIVE) has faced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few hedge funds that decided to sell off their entire stakes last quarter. Intriguingly, Jim Simons’s Renaissance Technologies dropped the biggest position of the “upper crust” of funds watched by Insider Monkey, worth an estimated $22.4 million in stock, and Alexander Mitchell of Scopus Asset Management was right behind this move, as the fund said goodbye to about $11.8 million worth of shares. These transactions are important to note, as aggregate hedge fund interest was cut by 8 funds last quarter.
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. We will take a look at American Assets Trust, Inc (NYSE:AAT), Kemper Corporation (NYSE:KMPR), InterDigital, Inc. (NASDAQ:IDCC), and Evercore Partners Inc. (NYSE:EVR). This group of stocks’ market valuations resemble FIVE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AAT | 7 | 88354 | -3 |
| KMPR | 6 | 10389 | -1 |
| IDCC | 19 | 294575 | -5 |
| EVR | 19 | 112684 | -3 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $127 million. That figure was $148 million in FIVE’s case, which is a positive sign. InterDigital, Inc. (NASDAQ:IDCC) is the most popular stock in this table. On the other hand Kemper Corporation (NYSE:KMPR) is the least popular one with only 6 bullish hedge fund positions. Five Below Inc (NASDAQ:FIVE) is not the least popular stock in this group, yet hedge fund interest is still below average and we treat this is a slightly negative signal. We’d rather spend our time researching stocks that hedge funds are piling on and believe IDCC might be a better candidate for further research before considering a long position.
