Hedge Funds Aren’t Crazy About Five Below Inc (FIVE) Anymore

Five Below Inc (NASDAQ:FIVE) was in 6 hedge funds’ portfolio at the end of the fourth quarter of 2012. FIVE has seen a decrease in support from the world’s most elite money managers lately. There were 8 hedge funds in our database with FIVE positions at the end of the previous quarter.

In the eyes of most market participants, hedge funds are viewed as unimportant, old investment vehicles of years past. While there are over 8000 funds trading at present, we at Insider Monkey look at the masters of this club, about 450 funds. Most estimates calculate that this group oversees the lion’s share of the smart money’s total capital, and by keeping an eye on their best investments, we have formulated a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).

Five Below Inc (NASDAQ:FIVE)

Just as integral, bullish insider trading sentiment is a second way to parse down the stock market universe. Just as you’d expect, there are plenty of reasons for a corporate insider to cut shares of his or her company, but only one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this strategy if you understand what to do (learn more here).

Now, we’re going to take a gander at the recent action encompassing Five Below Inc (NASDAQ:FIVE).

How are hedge funds trading Five Below Inc (NASDAQ:FIVE)?

At year’s end, a total of 6 of the hedge funds we track were long in this stock, a change of -25% from the third quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.

Of the funds we track, Miura Global Management, managed by Pasco Alfaro / Richard Tumure, holds the biggest position in Five Below Inc (NASDAQ:FIVE). Miura Global Management has a $17.7 million position in the stock, comprising 2.4% of its 13F portfolio. On Miura Global Management’s heels is Panayotis æTakisÆ Sparaggis of Alkeon Capital Management, with a $8 million position; 0.2% of its 13F portfolio is allocated to the company. Other peers with similar optimism include Drew Cupps’s Cupps Capital Management, Ward Davis and Brian Agnew’s Caerus Global Investors and Steven Cohen’s SAC Capital Advisors.

Judging by the fact that Five Below Inc (NASDAQ:FIVE) has faced a declination in interest from the aggregate hedge fund industry, we can see that there were a few fund managers who were dropping their entire stakes at the end of the year. Intriguingly, James Crichton and Adam Weiss’s Scout Capital Management cut the biggest stake of the “upper crust” of funds we watch, totaling an estimated $30.5 million in stock., and Israel Englander of Catapult Capital Management was right behind this move, as the fund cut about $0.8 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds at the end of the year.

What have insiders been doing with Five Below Inc (NASDAQ:FIVE)?

Insider purchases made by high-level executives is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the latest half-year time frame, Five Below Inc (NASDAQ:FIVE) has seen zero unique insiders buying, and 22 insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to Five Below Inc (NASDAQ:FIVE). These stocks are Francesca’s Holdings Corp (NASDAQ:FRAN), HSN, Inc. (NASDAQ:HSNI), Vitamin Shoppe Inc (NYSE:VSI), Coinstar, Inc. (NASDAQ:CSTR), and Sothebys (NYSE:BID). This group of stocks belong to the specialty retail, other industry and their market caps are similar to FIVE’s market cap.