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Is Eli Lilly & Co. (LLY) A Good Stock To Buy?

Is Eli Lilly & Co. (NYSE:LLY) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Eli Lilly & Co. was in 47 hedge funds’ portfolios at the end of September. LLY has experienced an increase in hedge fund interest of late. There were 43 hedge funds in our database with LLY holdings at the end of the previous quarter. At the end of this article we will also compare LLY to other stocks, including Walgreens Boots Alliance Inc (NASDAQ:WBA), AbbVie Inc (NYSE:ABBV), and The Boeing Company (NYSE:BA) to get a better sense of its popularity.

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Today there are a large number of tools that stock market investors use to assess publicly traded companies. Two of the most under-the-radar tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the elite investment managers can outperform the broader indices by a solid margin (see the details here).

Keeping this in mind, we’re going to view the new action encompassing Eli Lilly & Co. (NYSE:LLY).

What does the smart money think about Eli Lilly & Co. (NYSE:LLY)?

At the end of the third quarter, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Ken Griffin’s Citadel Investment Group has the most valuable position in Eli Lilly & Co. (NYSE:LLY), worth close to $369.4 million, corresponding to 0.4% of its total 13F portfolio. The second largest stake is held by Cliff Asness’ AQR Capital Management, with a $204.2 million position; 0.4% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Hal Mintz’s Sabby Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and D. E. Shaw’s D E Shaw.

Now, key money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, initiated the most valuable position in Eli Lilly & Co. (NYSE:LLY). Point72 Asset Management had $123 million invested in the company at the end of the quarter. Samuel Isaly’s OrbiMed Advisors also initiated a $106.5 million position during the quarter. The other funds with new positions in the stock are Christopher James’ Partner Fund Management, Arthur B Cohen and Joseph Healey’s Healthcor Management LP, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Eli Lilly & Co. (NYSE:LLY). We will take a look at Walgreens Boots Alliance Inc (NASDAQ:WBA), AbbVie Inc (NYSE:ABBV), The Boeing Company (NYSE:BA), and 3M Co (NYSE:MMM). This group of stocks’ market valuations are closest to LLY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WBA 91 9515034 10
ABBV 78 5242795 -1
BA 35 1177207 -9
MMM 42 1907344 2

As you can see these stocks had an average of 62 hedge funds with bullish positions and the average amount invested in these stocks was $4.46 billion. That figure was $2.29 billion in LLY’s case. Walgreens Boots Alliance Inc (NASDAQ:WBA) is the most popular stock in this table, while The Boeing Company (NYSE:BA) is the least popular one with only 35 bullish hedge fund positions. Eli Lilly & Co. (NYSE:LLY) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WBA might be a better candidate to consider a long position.

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