ClearBridge Investments, an investment management company, released its “ClearBridge Mid Cap Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. Beginning in July, a significant shift away from large caps fueled a rebound and helped the Russell Midcap Index beat its peers with larger sizes. The Russell Midcap Index returned 9.21% in the quarter compared to a 6.08% gain of the large-cap Russell 1000 Index. During the quarter, the strategy underperformed its Russell Midcap Index. Detractors in the industrial and communication services sectors outweighed positive contributions from holdings in IT and healthcare. In addition, please check the fund’s top five holdings to know its best picks in 2024.
ClearBridge Mid Cap Strategy highlighted stocks like Five Below, Inc. (NASDAQ:FIVE), in the third quarter 2024 investor letter. Five Below, Inc. (NASDAQ:FIVE) is a US-based specialty value retailer. The one-month return of Five Below, Inc. (NASDAQ:FIVE) was 2.78%, and its shares lost 44.29% of their value over the last 52 weeks. On October 8, 2024, Five Below, Inc. (NASDAQ:FIVE) stock closed at $92.07 per share with a market capitalization of $5.064 billion.
ClearBridge Mid Cap Strategy stated the following regarding Five Below, Inc. (NASDAQ:FIVE) in its Q3 2024 investor letter:
“We exited our position in Five Below, Inc. (NASDAQ:FIVE), which operates as a specialty value retailer for products including apparel, accessories, novelty items, décor, cosmetics and accent furniture. The company’s share price has been impacted by elevated shrink, as well as persistent inflationary pressures weighing on lower-end consumers. While the issues involving shrink are endemic across the entire sector, we believed that the company’s low price point would make it a beneficiary of persistent inflation and weakening consumer spending. However, as consumers tightened their spending, we underestimated how discretionary the company was seen by consumers who instead turned to other off-price discount retailers they perceived as having greater value. These factors, along with the departure of the company’s CEO, ultimately contributed to our sell decision.”
A family happily shopping for everyday items in a specialty retail store.
Five Below, Inc. (NASDAQ:FIVE) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held Five Below, Inc. (NASDAQ:FIVE) at the end of the second quarter which was 39 in the previous quarter. Five Below, Inc.’s (NASDAQ:FIVE) sales increased by 9.4% year-over-year to $830 million in the second quarter of 2024, while comparable sales were down by 5.7%. While we acknowledge the potential of Five Below, Inc. (NASDAQ:FIVE) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Five Below, Inc. (NASDAQ:FIVE) and shared Baird Mid Cap Growth Equity Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.