When looking for investment inspiration, it's a great idea to consider what some of the world's most successful investors are doing. Each one of their moves may not be right for your particular investment strategy, but you may find certain ones that offer just what you're looking for. If you're looking for a low-risk growth stock that also happens to be outperforming the S&P 500 (^GSPC 0.55%) so far this year, it's time to consider a recent move made by three billionaires.
Stanley Druckenmiller of the Duquesne Family Office, Chase Coleman of Tiger Global Management, and Stephen Mandel Jr. of Lone Pine Capital each bought shares of a stock that operates in an industry known for steady performance, regardless of the market environment. It's in the pharmaceuticals sector but sells a product that's generating outsized revenue growth. This stock could be particularly interesting during times of economic uncertainty -- like today -- because of this solid combination of safety and growth.
Image source: Getty Images.
Generating blockbuster revenue
What stock am I talking about? A company that's been around for more than 145 years but has soared to the forefront in recent times, thanks to its star product, weight loss drugs. I'm talking about Eli Lilly (LLY 0.37%), the maker of tirzepatide.
This compound is sold under the name Mounjaro for type 2 diabetes and Zepbound for weight loss, but doctors have prescribed them to patients seeking to drop pounds. Both products have been generating blockbuster revenue and are helping the company's total revenue to climb in the double digits.
I'll talk more about that in a minute, but first, here's a look at the moves the billionaires made in the fourth quarter of last year. (Investors know about these purchases because managers of more than $100 million in securities must declare their latest buys and sells on form 13F to the Securities and Exchange Commission on a quarterly basis.)
In the recent quarter, Druckenmiller opened a new position in Lilly, buying 62,190 shares, and it now makes up about 1.3% of his portfolio. Mandel also opened a position in the stock, acquiring 782,860 shares, which represents 4.4% of his total holdings. Finally, Coleman increased his Lilly holding by 35% and now owns 1,309,960 shares, which represents 3.8% of Tiger Global's portfolio.
NYSE: LLY
Key Data Points
Favoring growth stocks
Each of these billionaires is known for investing in growth stocks. For example, Druckenmiller held shares of Nvidia for a number of years before selling them last year and locking in gains. Mandel and Coleman clearly agree on the potential of Meta Platforms. It's the biggest holding in both of their portfolios, with an 8.8% weighting in Mandel's and a 16% weighting in Coleman's.
As mentioned, pharma stocks offer investors safety because, regardless of what's happening in the world, people need their medical treatments. This ensures a certain level of stability in product revenue.
Investors benefit from this when investing in Lilly. However, thanks to the company's dominance in the weight loss drug market, they also are gaining access to growth. That may be why Lilly attracted the attention of these growth-oriented billionaires.
Last year, Mounjaro's revenue soared 124% to more than $11 billion. Zepbound won approval in late 2023 and doesn't have a year-earlier comparison period, but the drug delivered more than $4 billion in revenue in 2024.
Growth is likely to continue, considering the high demand for these products. Until just recently, demand surpassed supply, and regulators had placed tirzepatide on its drug shortage list.
A market that may reach $100 billion
Lilly's investment in manufacturing has helped increase supply, making the drug more readily available for patients in recent months. Still, demand isn't likely to let up, and analysts predict the weight loss drug market will become a more than $100 billion one by the end of the decade.
All of this has translated into solid stock performance for Lilly, with gains of more than 180% over the past three years. This year, it's demonstrated its ability to manage a turbulent market -- Lilly has climbed 7%, outpacing the S&P 500.
If you're looking for the safety of a pharma stock along with growth that you generally may see in other industries -- such as technology, for example -- Lilly fits the bill. That makes it a great billionaire-approved stock to buy today and hold for the long term.
