We recently published a list of Top 10 Stocks to Buy According to Two Sigma Investments. In this article, we are going to take a look at where Eli Lilly and Company (NYSE:LLY) stands against other top stocks to buy according to Two Sigma Investments.
Two Sigma Investments, LP, a New York City-based hedge fund, is known for its advanced use of artificial intelligence, machine learning, and distributed computing in financial trading. Founded by John Overdeck and David Siegel, the firm operates with a strong emphasis on technology-driven investment strategies. As a leader in quantitative finance, Two Sigma employs a rigorous, scientific approach to generating alpha in global markets, leveraging vast datasets and high-performance computing to identify patterns and market inefficiencies. With a workforce of approximately 1,700 employees, two-thirds of whom are dedicated to research and development, the firm remains at the forefront of data-driven investment management.
At the core of Two Sigma’s approach is its commitment to systematic research, blending creative insights with cutting-edge data analysis. Drawing from fields such as artificial intelligence, economics, and distributed computing, its analysts develop models that not only make financial and economic sense but also evolve with market conditions. The firm integrates systematic risk management tools and human oversight, ensuring disciplined execution and adaptability in dynamic financial environments. By harnessing insights from thousands of diverse data sources, Two Sigma continues to refine its strategies, pushing the boundaries of quantitative investing. The firm’s investment in high-performance computing enables it to process and analyze massive datasets with speed and precision. This data-driven methodology allows for the identification of complex market relationships that traditional investment strategies might overlook. With a steadfast focus on innovation, Two Sigma remains a leader in quantitative finance, continuously advancing the frontiers of data science and algorithmic trading.
The co-founder of Two Sigma Investments, John Albert Overdeck is a prominent American hedge fund manager and a lifelong mathematics enthusiast. He pursued higher education at Stanford University, where he earned both a bachelor’s degree in mathematics (with distinction) and a master’s degree in statistics. His expertise in quantitative analysis and data-driven decision-making laid the foundation for his future success in finance and technology.
Before co-founding Two Sigma Investments in 2001, Overdeck held key leadership roles at major financial and technology firms. He began his career at D.E. Shaw & Co., where he rose to the position of managing director, overseeing Japanese equity investments and the firm’s London investment management operations. He later joined Amazon.com as vice president and technical assistant to founder Jeff Bezos, leading the company’s customer relationship management initiatives and scaling its personalization and targeted marketing technologies. His work at Amazon played a crucial role in enhancing the company’s data-driven customer engagement strategies.
Beyond his professional achievements, Overdeck is a dedicated philanthropist and advocate for mathematics and education. He serves as chair of the Institute for Advanced Study, the National Museum of Mathematics, and the Bedtime Math Foundation. Additionally, he is a board member of Robin Hood and president of the Overdeck Family Foundation, which funds innovative programs aimed at improving education. Recognized for his contributions to technology and investment management, Overdeck was honored by the Academy of Achievement in 2017 for his pioneering work in the field.
David Mark Siegel is a distinguished computer scientist, entrepreneur, and philanthropist. As the co-founder and co-chairman of Two Sigma, he has played a pivotal role in integrating advanced technology and data science into investment management. Siegel pursued higher education at Princeton University, earning a degree in electrical engineering and computer science, followed by a PhD in computer science from the Massachusetts Institute of Technology. During his time at MIT, he conducted groundbreaking research at the Artificial Intelligence Laboratory, further cementing his expertise in computational systems.
Beyond his professional achievements, Siegel is deeply committed to philanthropy, particularly in education, science, and technology. In 2011, he founded the Siegel Family Endowment to support initiatives that explore the societal impact of technology. He serves as Chairman of the Board of Overseers at Cornell Tech and holds board positions at Carnegie Hall and the Robin Hood Learning & Tech Fund. Additionally, he co-founded the Scratch Foundation, which promotes creative problem-solving through coding education for children. His involvement extends to advisory roles at Khan Academy, Stanford’s Center on Philanthropy and Civil Society, and Princeton’s Center on Information Technology Policy. As a member of the MIT Corporation, he contributes to initiatives such as MIT Quest for Intelligence, which aims to advance human understanding of artificial intelligence and its applications. Through his work, Siegel continues to shape the future of technology and education, ensuring lasting impact in both fields.
In its latest 13F filing for the fourth quarter of 2024, Two Sigma Investments disclosed approximately $43.22 billion in managed 13F securities, with its top ten holdings comprising 19.86% of its extensively diversified portfolio.
Our Methodology
The stocks discussed below were picked from Two Sigma Investments’ Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,009 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Eli Lilly and Company (NYSE:LLY)
Number of Hedge Fund Holders as of Q4: 115
Two Sigma Investments’ Equity Stake: $619.45 Million
Eli Lilly and Company (NYSE:LLY), established in 1876, is a multinational pharmaceutical firm headquartered in Indianapolis, Indiana, with operations spanning 18 countries. Its products are available in approximately 125 countries, highlighting its extensive global presence. Beyond its pharmaceutical innovations, the company prioritizes inclusive clinical trials and is dedicated to making its medications both accessible and affordable to diverse populations.
Two Sigma Investments recently boosted its holdings in Eli Lilly and Company (NYSE:LLY) by 50%, increasing its stake from 536,000 shares in Q3 2024 to 802,400 shares in Q4 2024. This investment, valued at over $619 million, positions the company as the hedge fund’s seventh most valuable holding in its 13F filings for the quarter ending December 2024.
On February 6, 2025, Eli Lilly and Company (NYSE:LLY) announced its fourth-quarter 2024 financial results, showcasing impressive revenue growth and a promising outlook. CEO David A. Ricks highlighted the company’s progress in addressing chronic diseases linked to obesity, expanding manufacturing operations, and introducing key new therapies. Quarterly revenue soared by 45% year-over-year to $13.53 billion, driven largely by the strong performance of its products Mounjaro and Zepbound. Earnings per share (EPS) more than doubled, surging 114% to $5.32. Looking ahead, Eli Lilly forecasts 2025 revenue in the range of $58.0 billion to $61.0 billion, with an EPS estimate between $22.05 and $23.55, reinforcing confidence in its future financial trajectory.
According to Insider Monkey’s database, 115 hedge funds held positions in Eli Lilly and Company (NYSE:LLY) at the close of Q4 2024, with a combined value nearing $16.65 billion—an increase from 106 funds in the prior quarter. This growing hedge fund interest reflects strong confidence in the company’s long-term growth prospects and its robust pharmaceutical pipeline.
With a history of innovation, strong revenue performance, and increasing investor confidence, Eli Lilly and Company (NYSE:LLY) remains a top stock to buy according to Two Sigma Investments. Its dominance in high-demand therapeutic areas and ongoing product launches position the company for sustained success in the pharmaceutical sector.
RiverPark Large Growth Fund stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Q4 2024 investor letter:
“Eli Lilly and Company (NYSE:LLY): LLY was a top detractor in the fourth quarter following a rare revenue miss in the company’s 3Q update. The greater than $1 billion miss in the tirzepatide complex (Mounjaro/Zepbound) was caused by a combination of factors, including wholesaler stocking patterns (2Q inventory build, 3Q sell through), refrigerated supply chain constraints, timing of the company’s direct-to-consumer efforts, and the pace of international market launches. We believe the diabetes/obesity/weight-loss market is enormous and that current GLP-1 drugs, though no longer supply constrained, are greatly in demand. We are confident that LLY’s recent sales shortfall was supply chain-related and that the company’s tirzepatide franchise growth will soon reaccelerate.
LLY discovers, develops, manufactures, and markets pharmaceutical products. The company manufactures and distributes products through facilities in the United States and seven other countries and sells into 110 countries. The company has a broad and deep portfolio of products including a focus on diabetes, oncology, immunology and neuroscience. More recently, LLY’s GLP-1 diabetes drug Mounjaro and obesity drug Zepbound, have delivered strong revenue growth, and investors are optimistic that the company’s recently approved Alzheimer drug, Kisunla, will add to that growth.
LLY has a stable portfolio of franchise products, which enables it to invest heavily in its product pipeline. We believe that this combination of franchise and growth products will drive high teens revenue growth and a four-fold increase in free cash flow in the next five years.”
Overall, LLY ranks 7th on our list of top stocks to buy according to Two Sigma Investments. While we acknowledge the potential for LLY as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LLY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
