Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 823 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Eli Lilly and Company (NYSE:LLY) in this article.
Eli Lilly and Company (NYSE:LLY) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Eli Lilly and Company (NYSE:LLY) was in 51 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 57. There were 43 hedge funds in our database with LLY holdings at the end of March. Our calculations also showed that LLY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are a multitude of tools stock market investors have at their disposal to value publicly traded companies. A pair of the less known tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite money managers can outclass the market by a superb amount (see the details here).
Michael Castor of Sio Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind let’s take a look at the latest hedge fund action regarding Eli Lilly and Company (NYSE:LLY).
How have hedgies been trading Eli Lilly and Company (NYSE:LLY)?
At the end of June, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards LLY over the last 20 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Eli Lilly and Company (NYSE:LLY) was held by Fisher Asset Management, which reported holding $738.6 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $392.4 million position. Other investors bullish on the company included AQR Capital Management, Citadel Investment Group, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Huber Capital Management allocated the biggest weight to Eli Lilly and Company (NYSE:LLY), around 3.42% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, setting aside 2.2 percent of its 13F equity portfolio to LLY.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the largest position in Eli Lilly and Company (NYSE:LLY). Marshall Wace LLP had $26.8 million invested in the company at the end of the quarter. Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund also initiated a $14.8 million position during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Michael Castor’s Sio Capital, and Bhagwan Jay Rao’s Integral Health Asset Management.
Let’s now take a look at 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 ASML Holding N.V. (NASDAQ:ASML), Novo Nordisk A/S (NYSE:NVO), NIKE, Inc. (NYSE:NKE), The Unilever Group (NYSE:UL), Thermo Fisher Scientific Inc. (NYSE:TMO), AstraZeneca plc (NASDAQ:AZN), and Amgen, Inc. (NASDAQ:AMGN). This group of stocks’ market values match LLY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASML | 25 | 1961320 | -5 |
| NVO | 24 | 3294368 | 0 |
| NKE | 71 | 2603242 | -9 |
| UL | 13 | 149078 | 0 |
| TMO | 73 | 4525711 | -7 |
| AZN | 38 | 1920506 | 12 |
| AMGN | 51 | 1794209 | -1 |
| Average | 42.1 | 2321205 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 42.1 hedge funds with bullish positions and the average amount invested in these stocks was $2321 million. That figure was $2161 million in LLY’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand The Unilever Group (NYSE:UL) is the least popular one with only 13 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 68.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 30% in 2020 through October 23rd and beat the market by 21 percentage points. Unfortunately LLY wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on LLY were disappointed as the stock returned -12.9% since the end of June (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
