Hedge Funds Are Buying Eli Lilly & Co. (LLY)
Eli Lilly & Co. (NYSE:LLY) investors likely know every metric that's typically discussed in relation to the healthcare giant, but we'll shed light on a couple data points that you haven't seen yet.
Now, according to many traders, hedge funds are seen as delayed, outdated investment tools of a period lost to current times. Although there are more than 8,000 hedge funds with their doors open in present day, Insider Monkey aim at the upper echelon of this group, around 525 funds. It is assumed that this group has its hands on the majority of the smart money's total assets, and by watching their highest performing equity investments, we've determined a few investment strategies that have historically outpaced the S&P 500. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).
Equally as key, positive insider trading activity is a second way to analyze the investments you're interested in. As the old adage goes: there are a variety of stimuli for an insider to sell shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the useful potential of this tactic if shareholders understand where to look (learn more here).
Now that that's out of the way, it's important to analyze the latest info surrounding Eli Lilly & Co. (NYSE:LLY).
What does the smart money think about Eli Lilly & Co. (NYSE:LLY)?
Heading into Q3, a total of 38 of the hedge funds we track held long positions in this stock, a change of 9% from the previous quarter. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes meaningfully.
Out of the hedge funds we follow, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Eli Lilly & Co. (NYSE:LLY). Renaissance Technologies has a $605.5 million position in the stock, comprising 1.6% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, managed by Peter Rathjens Bruce Clarke and John Campbell, which held a $212.4 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Some other hedge funds that are bullish include Cliff Asness's AQR Capital Management, Jerome Pfund and Michael Sjostrom's Sectoral Asset Management and Israel Englander's Millennium Management.
Consequently, certain money managers were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, created the largest position in Eli Lilly & Co. (NYSE:LLY). Renaissance Technologies had 605.5 million invested in the company at the end of the quarter. Peter Rathjens Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $212.4 million position during the quarter. The other funds with brand new LLY positions are Cliff Asness's AQR Capital Management, Jerome Pfund and Michael Sjostrom's Sectoral Asset Management, and Israel Englander's Millennium Management.
Insider trading activity in Eli Lilly & Co. (NYSE:LLY)
Insider buying is most useful when the primary stock in question has seen transactions within the past half-year. Over the latest 180-day time period, Eli Lilly & Co. (NYSE:LLY) has experienced zero unique insiders buying, and 5 insider sales (see the details of insider trades here).
We'll also review the relationship between both of these indicators in other stocks similar to Eli Lilly & Co. (NYSE:LLY). These stocks are Merck & Co., Inc. (NYSE:MRK), GlaxoSmithKline plc (ADR) (NYSE:GSK), Bristol Myers Squibb Co. (NYSE:BMY), AstraZeneca plc (ADR) (NYSE:AZN), and AbbVie Inc (NYSE:ABBV). This group of stocks belong to the drug manufacturers - major industry and their market caps resemble LLY's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Merck & Co., Inc. (NYSE:MRK)
GlaxoSmithKline plc (ADR) (NYSE:GSK)
Bristol Myers Squibb Co. (NYSE:BMY)
AstraZeneca plc (ADR) (NYSE:AZN)
AbbVie Inc (NYSE:ABBV)
Using the returns shown by our analyses, regular investors should always keep one eye on hedge fund and insider trading activity, and Eli Lilly & Co. (NYSE:LLY) shareholders fit into this picture quite nicely.