Is ELAN Stock A Buy or Sell?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31st, so let’s proceed with the discussion of the hedge fund sentiment on Elanco Animal Health Incorporated (NYSE:ELAN).

Is ELAN stock a buy or sell? The smart money was betting on the stock. The number of long hedge fund positions advanced by 22 recently. Elanco Animal Health Incorporated (NYSE:ELAN) was in 43 hedge funds’ portfolios at the end of December. The all time high for this statistic is 36. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ELAN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 21 hedge funds in our database with ELAN positions at the end of the third quarter.

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Do Hedge Funds Think ELAN Is A Good Stock To Buy Now?

At the end of December, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 105% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in ELAN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Scott Ferguson’s Sachem Head Capital has the number one position in Elanco Animal Health Incorporated (NYSE:ELAN), worth close to $853.7 million, corresponding to 29.8% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $80.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish encompass Doug Silverman and Alexander Klabin’s Senator Investment Group, Simon Sadler’s Segantii Capital and George Soros’s Soros Fund Management. In terms of the portfolio weights assigned to each position Sachem Head Capital allocated the biggest weight to Elanco Animal Health Incorporated (NYSE:ELAN), around 29.79% of its 13F portfolio. One Fin Capital Management is also relatively very bullish on the stock, earmarking 7.97 percent of its 13F equity portfolio to ELAN.

Now, key hedge funds were leading the bulls’ herd. Soros Fund Management, managed by George Soros, assembled the most valuable position in Elanco Animal Health Incorporated (NYSE:ELAN). Soros Fund Management had $46 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also initiated a $42.6 million position during the quarter. The following funds were also among the new ELAN investors: Dmitry Balyasny’s Balyasny Asset Management, Brandon Haley’s Holocene Advisors, and Steve Cohen’s Point72 Asset Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Elanco Animal Health Incorporated (NYSE:ELAN) but similarly valued. These stocks are Teledyne Technologies Incorporated (NYSE:TDY), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), CureVac N.V. (NASDAQ:CVAC), Masco Corporation (NYSE:MAS), Gartner Inc (NYSE:IT), Generac Holdings Inc. (NYSE:GNRC), and Markel Corporation (NYSE:MKL). This group of stocks’ market caps resemble ELAN’s market cap.

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As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $697 million. That figure was $1493 million in ELAN’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand CureVac N.V. (NASDAQ:CVAC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Elanco Animal Health Incorporated (NYSE:ELAN) is more popular among hedge funds. Our overall hedge fund sentiment score for ELAN is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately ELAN wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on ELAN were disappointed as the stock returned 1.4% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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