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Why Traders Are Piling Into Lannett Company, Inc. (LCI)

Lannett Company, Inc. (NYSE:LCI) shares have spiked over 10% on Monday after peer generic drug company Akorn, Inc. (NASDAQ:AKRX) confirmed that it is currently in discussions with a subsidiary of German healthcare giant Fresenius SE about a potential acquisition of Akorn. In terms of potential take-over price, various Wall Street analysts have different estimates. Randall Stanicky of RBC Capital thinks Akorn shares are relatively fully priced, while Chris Cooper of Jefferies thinks a take-over price of $36-$40 for Akron is reasonable given previous comps.

Traders have bid Lannett Company, Inc. (NYSE:LCI) higher due to relative valuation as well as improved sentiment. The potential take-over of Akorn also makes Lannett a more likely M&A target in some trader’s eyes, although no formal or rumored bid has materialized.

What Does The Smart Money Sentiment Say?

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

According to our data for the fourth quarter, the number of elite funds with holdings in Lannett halved to 7 from 14 (at the end of Q3), but the amount held rose to $94.23 million from $71.99 million. In terms of individual activity in the fourth quarter, James E. Flynn‘s Deerfield Management established a new stake of 2.007 million shares while Philippe Laffont‘s Coatue Management trimmed its holdings by 29% to 1.12 million shares.

The Bottom Line

Lannett Company, Inc. (NYSE:LCI) shares have spiked higher due to the news that Fresenius SE is currently in talks to potentially buy peer Akorn, Inc. (NASDAQ:AKRX). For more reading, check out ‘Most Addictive Drugs In the World‘.

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