Is Barnes and Noble Education (BNED) A Smart Long-Term Buy?

Choice Equities Capital Management, an investment management firm, published its first-quarter 2021 investor letter – a copy of which can be downloaded here. A net return of +29.2% was recorded by the fund for the Q1 of 2021, outperforming its Russell 2000 benchmark that delivered a +12.7% return, and the S&P 500 Index that had a +6.2% gain for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Choice Equities Capital Management, in its Q1 2021 investor letter, mentioned Barnes & Noble Education, Inc. (NYSE: BNED), and shared their insights on the company. Barnes & Noble Education, Inc. is a Basking Ridge, New Jersey-based bookselling company that currently has a $407.4 million market capitalization. Since the beginning of the year, BNED delivered a 69.89% return, extending its 12-month gains to 378.79%. As of May 26, 2021, the stock closed at $8.01 per share.

Here is what Choice Equities Capital Management has to say about Barnes & Noble Education, Inc. in its Q1 2021 investor letter:

BNED – As a case in point, our recent investment in shares of Barnes & Noble Education captures this theme quite well. The cash flows of the campus-based retailer of books and apparel became quite challenged with students no longer on campus. Shares fell meaningfully as a result, suggesting shares were quite attractive on normalized cash flows. Even though their source of revenue had momentarily dissipated, their competitive position remained unchanged. They were still the only store-based retailer of scale with a presence on college campuses and entrenched relationships with universities. Additionally, our view of normalized cash flows contemplated little in the way of upside from early successes in the company’s promising new initiatives like their bartleby digital self-study program or their First Day Complete courseware offerings. Accordingly, late last year with a bit more certainty around the trajectory of campus re-openings, we initiated a position. With shares more than doubling in just a few months and no longer offering the margin of safety and attractive risk / return characteristics we have elsewhere, we
exited our position to reinvest the funds in our other holdings.”

Our calculations show that Barnes & Noble Education, Inc. (NYSE: BNED) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Barnes & Noble Education, Inc. was in 16 hedge fund portfolios, compared to 13 funds in the fourth quarter of 2020. BNED delivered a 22.29% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

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