Top 5 Stock Picks of John Overdeck and David Siegel’s Two Sigma Advisors

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In this article, we discuss the top 5 stock picks of John Overdeck and David Siegel’s Two Sigma Advisors. If you want our detailed analysis of these stocks, go directly to the Top 10 Stock Picks of John Overdeck and David Siegel’s Two Sigma Advisors

5. Merck & Co., Inc. (NYSE:MRK)

Two Sigma Advisors’ Stake Value: $471,713,000

Percentage of Two Sigma Advisors’ 13F Portfolio: 1.22%

Number of Hedge Fund Holders: 77

Merck & Co., Inc. (NYSE:MRK), a New Jersey-based multinational pharmaceutical company, is one of the top stock picks from the Q3 portfolio of John Overdeck and David Siegel’s Two Sigma Advisors, with the hedge fund owning 6.28 million Merck & Co., Inc. (NYSE:MRK) shares, worth $471.71 million, representing 1.22% of the total investments for the third quarter. 

As of September 2021, 77 hedge funds monitored by Insider Monkey were long Merck & Co., Inc. (NYSE:MRK), with stakes valued at $4.55 billion. This is compared to 79 funds being bullish on the stock in the preceding quarter, with a total stake value of $5.29 billion. Arrowstreet Capital is one of the leading Merck & Co., Inc. (NYSE:MRK) stakeholders from the third quarter, with 6.56 million shares amounting to $493.25 million. 

Merck & Co., Inc. (NYSE:MRK), on October 28, posted its Q3 results. EPS in the third quarter equaled $1.75, beating estimates by $0.20. The revenue was up 4.80% from the prior-year quarter at $13.15 billion, outperforming estimates by $833.53 million. 

Truist analyst Robyn Karnauskas on November 24 raised the price target on Merck & Co., Inc. (NYSE:MRK) to $95 from $92, and kept a Buy rating on the shares as part of a broader research note on major pharma.

Here is what Artisan Partners has to say about Merck & Co., Inc. (NYSE:MRK) in its Q1 2021 investor letter:

“In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement.”

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