Millionaire Israel Englander Expanded Millennium Management's Holding in a Rare Decade-Defining Pharmaceutical Company by 86%
Millionaire Israel Englander Expanded Millennium Management's Holding in a Rare Decade-Defining Pharmaceutical Company by 86%
Each trimester, financial organizations managing over a hundred million dollars are obligated to submit a detailed account of the shares they bought and sold during the previous quarter. These reports are referred to as a form 13F.
In the third quarter, Israel Englander of Millennium Management enhanced Millennium's ownership in pharmaceutical giant Eli Lilly (LLY -0.56%) by 86%, acquiring about 458,000 shares.
For a fund like Millennium, this isn't a substantial acquisition for their portfolio. Nevertheless, I view Englander's decision to expand Millennium's Lilly shares as a shrewd move. Below, I will explain why I consider Lilly as a once-in-a-decade investment opportunity, and why presently seems to be an opportune time to follow Englander's lead.
Why is Eli Lilly a once-in-a-decade opportunity?
Eli Lilly boasts several advantages. Currently, the company's primary momentum stems from its successful lineup of weight loss medications used to treat diabetes and obesity. Known as glucagon-like peptide-1 (GLP-1) agonists, Lilly's Mounjaro and Zepbound have each surpassed the billion-dollar mark in revenue over the past couple of years.
Although it's evident that Mounjaro and Zepbound are successful, I believe both treatments have room to grow. For instance, J.P. Morgan estimates that the potential market for GLP-1 drugs treating diabetes and chronic weight management will reach $100 billion by 2030.
It's worth noting that GLP-1 agonists are believed to have applications beyond weight loss. In fact, Lilly's main competitor in the weight loss sector, Novo Nordisk ( manufacturer of Ozempic and Wegovy), has already secured an expanded indication to treat obesity patients with cardiovascular disease risk. In my perspective, the GLP-1 market could exceed $100 billion in the long term as these drugs gain more approvals for various treatments.
Apart from weight loss, Lilly has also made strides in other healthcare sectors. Just this year, the company received FDA approval for its Alzheimer's drug candidate as well as a new eczema treatment, Ebglyss.
The reasons I see these approvals as significant milestones are twofold. First, adding Alzheimer's and eczema to its medical portfolio diversifies Lilly's overall business -- which already covers treatments for cancer, plaque psoriasis, and, of course, weight loss.
Secondly, the Alzheimer's and eczema markets are somewhat fragmented. This offers Lilly the possibility of carving out its own niche in these respective niches, which collectively represent a total addressable market in excess of $60 billion.
Even though Lilly seems to be thriving, investors might question how long the company's growth can endure. According to me, the answer is quite some time. This year, Lilly announced a significant investment in a new manufacturing and research facility.
Although Lilly has numerous catalysts across various sectors in the healthcare industry, I see the company as barely scratching the surface in terms of scaling these new opportunities. I believe Lilly's decision to continually invest in manufacturing and research demonstrates a dedication to long-term sustained growth and innovation.
Is Eli Lilly stock a buy right now?
For much of 2023, shares of Lilly were soaring driven by investor excitement surrounding the weight loss market and news of the company's drug approvals in Alzheimer's and eczema. However, after publishing a disappointing third-quarter earnings report a few weeks ago, Lilly stock has experienced a decline. Lilly stock has slumped 19% in just the past month and has dropped 8% in November alone.
While a Lilly stock decline might be unpleasant, it could be beneficial at this point. Before reporting earnings on Oct. 30, Lilly shares had surged 45% since the beginning of the year.
The stock was definitely overvalued by conventional valuation standards, and truthfully, it was just a matter of time before investors began selling. With all of that said, I remain optimistic about Lilly's long-term story and view the current situation as an excellent opportunity for long-term investors to acquire the dip in Eli Lilly.
In light of the financial reports, investing in shares like Eli Lilly can be a strategic move for financial organizations managing large sums, such as over a hundred million dollars. The potential growth of GLP-1 drugs, including Lilly's Mounjaro and Zepbound, is projected to reach a market value of $100 billion by 2030, making it an attractive investment opportunity.
Given that Lilly's stock has experienced a decline after a disappointing third-quarter earnings report, it might present a perfect opportunity for investors to consider investing money in this company, especially considering its long-term growth potential.