Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Eli Lilly and Company (NYSE:LLY) changed recently.
Is Eli Lilly and Company (NYSE:LLY) an attractive stock to buy now? The best stock pickers were becoming hopeful. The number of long hedge fund positions rose by 9 in recent months. Eli Lilly and Company (NYSE:LLY) was in 64 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 60. This means the bullish number of hedge fund positions in this stock currently sits at its new all time high. Our calculations also showed that LLY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 55 hedge funds in our database with LLY positions at the end of the first quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. We check out articles like Warren Buffett’s 3 money saving tips that provide inflation and volatility hedges. 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. 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 homepage. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing Eli Lilly and Company (NYSE:LLY).
Do Hedge Funds Think LLY Is A Good Stock To Buy Now?
At second quarter’s end, a total of 64 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LLY over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in Eli Lilly and Company (NYSE:LLY), which was worth $1379.5 million at the end of the second quarter. On the second spot was GQG Partners which amassed $391.2 million worth of shares. AQR Capital Management, Citadel Investment Group, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sustainable Insight Capital Management allocated the biggest weight to Eli Lilly and Company (NYSE:LLY), around 4.77% of its 13F portfolio. Partner Fund Management is also relatively very bullish on the stock, designating 3.78 percent of its 13F equity portfolio to LLY.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, assembled the most outsized position in Eli Lilly and Company (NYSE:LLY). Senator Investment Group had $91.8 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $17.6 million position during the quarter. The other funds with brand new LLY positions are Efrem Kamen’s Pura Vida Investments, D. E. Shaw’s D E Shaw, and Krishen Sud’s Sivik Global Healthcare.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Eli Lilly and Company (NYSE:LLY) but similarly valued. We will take a look at Pfizer Inc. (NYSE:PFE), Oracle Corporation (NASDAQ:ORCL), Abbott Laboratories (NYSE:ABT), AT&T Inc. (NYSE:T), Novartis AG (NYSE:NVS), PepsiCo, Inc. (NYSE:PEP), and Chevron Corporation (NYSE:CVX). This group of stocks’ market valuations resemble LLY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFE | 67 | 2356906 | 2 |
| ORCL | 55 | 2889687 | 3 |
| ABT | 61 | 4367607 | -4 |
| T | 68 | 2896412 | 5 |
| NVS | 22 | 1798368 | 3 |
| PEP | 66 | 5193638 | 5 |
| CVX | 50 | 4272637 | 9 |
| Average | 55.6 | 3396465 | 3.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 55.6 hedge funds with bullish positions and the average amount invested in these stocks was $3396 million. That figure was $2995 million in LLY’s case. AT&T Inc. (NYSE:T) is the most popular stock in this table. On the other hand Novartis AG (NYSE:NVS) is the least popular one with only 22 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 85.7. 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Hedge funds were also right about betting on LLY as the stock returned 11.4% since the end of Q2 (through 10/29) 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.
