Is Eli Lilly (LLY) Stock A Buy or Sell? (2024)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Eli Lilly and Company (NYSE:LLY).

Is LLY stock a buy or sell? Eli Lilly and Company (NYSE:LLY) was in 50 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 60. LLY has experienced a decrease in enthusiasm from smart money of late. There were 60 hedge funds in our database with LLY holdings at the end of September. Our calculations also showed that LLY isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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. 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 124 percentage points since March 2017 (see the details here).

Rajiv Jain of GQG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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 (or at the end of this article). With all of this in mind let's check out the new hedge fund action surrounding Eli Lilly and Company (NYSE:LLY).

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

At the end of December, a total of 50 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the third quarter of 2020. By comparison, 43 hedge funds held shares or bullish call options in LLY a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting 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 $850.6 million worth of stock at the end of December. It was followed by Citadel Investment Group with a $358.9 million position. Other investors bullish on the company included GQG Partners, AQR Capital Management, and Millennium Management. 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 6.14% of its 13F portfolio. Tri Locum Partners is also relatively very bullish on the stock, earmarking 3.4 percent of its 13F equity portfolio to LLY.

Judging by the fact that Eli Lilly and Company (NYSE:LLY) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there exists a select few fund managers who sold off their positions entirely heading into Q1. At the top of the heap, Renaissance Technologies dropped the largest position of the 750 funds tracked by Insider Monkey, worth an estimated $71.3 million in stock. Donald Sussman's fund, Paloma Partners, also cut its stock, about $26.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 10 funds heading into Q1.

Let's now review 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 McDonald's Corporation (NYSE:MCD), Unilever PLC (NYSE:UL), Danaher Corporation (NYSE:DHR), Medtronic plc (NYSE:MDT), SAP SE (NYSE:SAP), NextEra Energy, Inc. (NYSE:NEE), and Texas Instruments Incorporated (NASDAQ:TXN). 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 MCD,62,2889876,-3 UL,25,1172892,12 DHR,81,5378840,6 MDT,59,2814949,-3 SAP,14,1390775,-2 NEE,61,3078288,-3 TXN,56,2497473,1 Average,51.1,2746156,1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 51.1 hedge funds with bullish positions and the average amount invested in these stocks was $2746 million. That figure was $3028 million in LLY's case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 14 bullish hedge fund positions. Eli Lilly and Company (NYSE:LLY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for LLY is 46.9. 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. A small number of hedge funds were also right about betting on LLY as the stock returned 9.6% since the end of the fourth quarter (through 3/19) and outperformed the market by an even larger margin.

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

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