Billionaire Israel Englander Increased His Stake In Eli Lilly During the Third Quarter: Should You?


After flying high during the first half of the year, pharmaceutical giant Eli Lilly (NYSE: LLY) has lost some momentum; the company’s shares are down by 11% since June 1. However, the healthcare leader still has plenty of fans on Wall Street, including Israel Englander, the billionaire owner of Millennium Management, a hedge fund.

Millennium Management’s stake in Eli Lilly increased by 86% in the third quarter. Should you follow Englander’s lead and increase your stake (or initiate a position) in Eli Lilly?

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LLY Chart
LLY data by YCharts.

Since June 1, Lilly has earned approval for brand-new medicines, including eczema treatment Ebglyss and a potential blockbuster Alzheimer’s disease medicine, Kisunla. It reported several positive data readouts for its new best-selling medicine tirzepatide. And the company’s second-quarter results came with an upward guidance adjustment.

What, then, is the cause of Lilly’s poor performance in the second half of the year? First, its shares look expensive. Eli Lilly’s forward price-to-earnings ratio was recently 54.8. The average for the S&P 500 is 22, and the healthcare industry’s is only 17.4.

LLY PE Ratio (Forward) Chart
LLY PE Ratio (Forward) data by YCharts.

Eli Lilly has been on a tear for a while now, and its shares were bound to face gravity at some point. Some investors likely decided to pocket significant profits before it did.

Second, Lilly’s third-quarter results were below expectations. Revenue grew by 20% year over year to $11.4 billion. That’s not bad by any means, but it wasn’t enough to impress investors, especially considering the company’s valuation. Lilly slightly reducing its guidance for the full year 2024 made things worse, sending the stock off a cliff following its latest quarterly update.

Eli Lilly might or might not rebound by the end of the year. It’s impossible to predict how its shares will perform in the next month, or three, or six. But what if we extend our horizon beyond the next five years? Then we have every reason to think that Lilly can deliver market-beating returns. Let’s consider just three:

First, the company’s tirzepatide — sold under the brand name Mounjaro for diabetes and Zepbound for weight management — is still only getting started. The two brands racked up combined sales of $4.4 billion in the third quarter. Mounjaro was first approved in May 2022, and Zepbound in November 2023.



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