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Harding Loevner Invested in Five Below (FIVE) and Here’s Why You Should Too

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Jose Karlo Mari Tottoc
·3 min read
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Harding Loevner, an investment management firm, published its “Global Small Companies Equity” fourth quarter 2020 investor letter – a copy of which can be downloaded here. A net return of 17.68% was recorded by the fund in the fourth quarter of 2020, trailing its MSCI All Country World Small Cap benchmark that delivered a 23.79% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Harding Loevner, in their Q4 2020 investor letter, mentioned Five Below, Inc. (NASDAQ: FIVE) and shared their insights on the company. Five Below, Inc. is a Philadelphia, Pennsylvania-based discount store company that currently has a $10.7 billion market capitalization. Since the beginning of the year, FIVE delivered a 9.04% return, impressively extending its 12-month gains to 198.58%. As of March 31, 2021, the stock closed at $190.79 per share.

Here is what Harding Loevner has to say about Five Below, Inc. in their Q4 2020 investor letter:

"Throughout the year, we tried methodically to rebalance the portfolio between “stay at home” and “return to normal” whenever the market appeared too pessimistic or optimistic about the sustainability of recent, pandemic-driven trends. As the year went on, we found ourselves tilting more towards “return to normal.” We established a new position in US retailer Five Below, a discount chain built around a rather simple concept: fill nondescript big-box locations with as many as possible items priced under US$5 that can tickle the imagination of an American teen or tween. As “pre-2020” as that may sound, we were impressed by the company’s quick resumption of strong same-store sales growth after the lockdowns early in the year. Clearly, Five Below offers a value and entertainment proposition that e-commerce is not able to satisfy and which we can see ourselves “sitting” on potentially for years to come."

Pixabay/Public Domain

Our calculations show that Five Below, Inc. (NASDAQ: FIVE) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Five Below, Inc. was in 42 hedge fund portfolios, compared to 44 funds in the third quarter. FIVE delivered a 10.45% 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.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

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