Giverny Capital’s Bullish Outlook on Five Below (FIVE) Incorporated

Giverny Capital Asset Management LLC, an investment management firm, published its fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 15.39% was recorded by the fund for the Q4 of 2020, above its S&P 500 benchmark that returned 12.15%. You can view the fund’s top 10 holdings to have a peek at their top bets for 2021.

Giverny Capital, in their Q4 2020 Investor Letter said that they are optimistic in Five Below, Inc. (NASDAQ: FIVE), and that they project that the company can triple its store base over time, at high returns on invested capital, while also growing the sales per store. Five Below, Inc. is a premier company chain of specialty discount stores that currently has a $10 billion market cap. For the past 3 months, FIVE delivered a decent 36.38% return and settled at $184.75 per share at the closing of January 26th.

Here is what Giverny Capital Asset Management has to say about Five Below, Inc. in their Investor Letter:

“Five Below is an extreme-value retailer offering a mix of items both fun and essential to a young customer, with nearly everything in the store priced at $5 or less. Recent performance can accurately be described as stellar, with comparable store sales up 10% during the holiday season and overall sales growth up more than 20%. Teens and tweens may live their lives online, but they like to find bargains on school supplies, tech accessories, games and room décor at Five Below. We believe the company can triple the store base over time, at high returns on invested capital, while also growing sales per store. Five Below has been rolling out small selections of higher priced items, priced up to $15, and has met little resistance. That bodes very well for the future – young people are willing to spend an increasing portion of their pocket money in the store. The stock has tripled from our first purchases in the spring, reflecting a robust recovery from pandemic and the long growth runway the business enjoys.”

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Last December 2020, we published an article telling that Five Below, Inc. (NASDAQ: FIVE) was in 44 hedge fund portfolios its all time high statistics. FIVE delivered a 52.66% return in the past 12 months.

Our calculations shows that Five Below, Inc. (NASDAQ: FIVE) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.