Eli Lilly & Co. (LLY)

They just reported a huge earnings beat and raised full-year forecast because of their weight-loss drug. Run by a great CEO. Yes, there are many competitors, but LLY remains ahead of them all. There are spending $20 billion to build/expand facilities to produce more weight-loss drugs.

It's like a Mag 7 stock: up a lot this year and too expensive. Wait for the right price.

News just keeps getting better and better as to how obesity drugs can help other medical conditions. Cautious on it now, selling down as the position increased in the portfolio. Overhang is competitors coming in over next 3-5 years, and the dominant position today may not be so dominant.

The GLP-1 weight loss companies are really in the sweet spot. For example for LLY, a very large holding for him, the opportunity for them is a very large marketplace. Getting approval for a broader range of uses. 

He also owns ISRG, which will help with the cost of healthcare, a very big growth opportunity. He owns MCK too.

Those 3 names together make up a 5% weight for him, which is underweight the market.

Doesn't know NVO well enough nor their drug pipeline. Yes, their weight-loss drug has done well, but he doesn't own this or LLY. Their valuations have priced in the weight-loss drugs. He prefers Amgen, because their weight-loss drug is under trial and not priced into the stock yet. And it trades at a lower PE than these peers.

It rallied today on news that it was buying a biotech; they expand into drugs to treat the inflammatory bowel space. They lead in this space. Unlike their peers in weight-loss drugs, LLY has a strong balance sheet and multi-billion dollar plants that can pump out the drug. Production capacity is the key to beating competition. That's why he hasn't taken profits. In the pipeline includes an Alzheimer's drug.

In an uptrend, higher highs and higher lows. Ideal time to buy or add is when there's a bit of a pullback and stock hits the trendline. Hard to predict 3-5 years for anything these days, but if the trend is up, stay with it.

Both are just too expensive. NVO is riding the wave of Ozempic, and already seeing a slew of competitive drugs to be released in next few years. LLY has been an incredibly well-run business. He could never buy something with a chart that looks like these, he just has to say he missed it and look for something that will generate returns for clients.

Tough thing with pharma is these drugs are massive successes, you get maybe 12 years of patent protection. Then your biggest success becomes your biggest concern as the patent wears off, and you struggle to find something else. It always happens.

The drug sector in RSI rankings has actually weakened, but this one has completely broken away from its sector. That's why it's good to look at RSI not only within groups and groups against each other, but also within the broader universe.

Has done very well on weight loss, plus favourable news on Alzheimer's drug. Hard to buy, especially as a value investor, as it keeps going higher. Trades over 60x PE. Lots of momentum. Expectations very high. History has shown that it's really hard for companies to sustain really strong growth rates for consecutive years and to continuously ramp up margins. Competition always comes in.

She's not a technical fund manager, but if there's a big pullback, you could use technicals to look for an entry point. Have to consider your investment horizon.

In the sector, weight loss is the growth area right now. So he'd probably look at LLY and NVO. Those pipelines are probably going to be fairly robust.

Chart's in an uptrend. Nothing nasty going on. Flattening, pulling back a bit. Good chart. Keep owning, and you could actually add to your position. Healthcare's not doing too badly as a sector.

Valuation has skyrocketed as a beneficiary of GLP-1 drugs, so MRK gets the nod. Good job developing products.

Is doing very well but is risky because it's trading at far higher multiple than its peers. If there's competition in their obesity drug, shares will sink.

Debt-to-equity continues to climb. He rebalanced his portfolio and sold this. Still a good stock that he targets $900 for. It trades like a biotech.