Is Eli Lilly and Company (NYSE:LLY) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Eli Lilly and Company (NYSE:LLY) investors should be aware of a decrease in hedge fund sentiment recently. Eli Lilly and Company (NYSE:LLY) was in 62 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 64. Our calculations also showed that LLY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks 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. Now we're going to analyze the latest hedge fund action encompassing Eli Lilly and Company (NYSE:LLY).
Steven Cohen of Point72 Asset Management
Do Hedge Funds Think LLY Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 62 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards LLY over the last 25 quarters. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Eli Lilly and Company (NYSE:LLY) was held by Fisher Asset Management, which reported holding $1504.7 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $468 million position. Other investors bullish on the company included GQG Partners, Adage Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Sphera Global Healthcare Fund allocated the biggest weight to Eli Lilly and Company (NYSE:LLY), around 6.76% of its 13F portfolio. Partner Fund Management is also relatively very bullish on the stock, earmarking 3.57 percent of its 13F equity portfolio to LLY.
Since Eli Lilly and Company (NYSE:LLY) has experienced falling interest from the smart money, it's easy to see that there were a few funds who were dropping their positions entirely heading into Q4. Interestingly, Efrem Kamen's Pura Vida Investments said goodbye to the biggest investment of the 750 funds watched by Insider Monkey, comprising about $15.1 million in stock. Brad Farber's fund, Atika Capital, also dumped its stock, about $8 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Eli Lilly and Company (NYSE:LLY). These stocks are Novo Nordisk A/S (NYSE:NVO), Danaher Corporation (NYSE:DHR), Intel Corporation (NASDAQ:INTC), Abbott Laboratories (NYSE:ABT), PepsiCo, Inc. (NASDAQ:PEP), Accenture Plc (NYSE:ACN), and Broadcom Inc (NASDAQ:AVGO). All of these stocks' market caps are closest to LLY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVO,27,4053265,7 DHR,74,6946837,-4 INTC,66,6472854,-12 ABT,63,3611527,2 PEP,61,4435441,-5 ACN,56,4460650,4 AVGO,50,2706386,3 Average,56.7,4669566,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 56.7 hedge funds with bullish positions and the average amount invested in these stocks was $4670 million. That figure was $4287 million in LLY's case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand Novo Nordisk A/S (NYSE:NVO) is the least popular one with only 27 bullish hedge fund positions. Eli Lilly and Company (NYSE:LLY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LLY is 69.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on LLY as the stock returned 7.7% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.