We're putting cash to work by buying more shares of this drugmaker

Published Thu, Jan 20 202212:25 PM ESTUpdated Thu, Jan 20 20221:56 PM EST

We are buying 50 shares of Eli Lilly (LLY) at roughly $246.08. Following the trade, the Charitable Trust will own 475 shares of Eli Lilly. This buy will increase Eli Lilly's weight in the portfolio from about 2.55% to 2.84%. In today's Morning Meeting , we talked about how the S & P 500 was being oversold (according to the S & P Oscillator — see the first graphic of the video) and about how we were looking for opportunities to put the cash we raised earlier in the week to work in stocks that have come down off their highs. Eli Lilly has been a name we have defended a few times in the recent market swoon. We thought the sell-off looked overblown on Jan. 12, when the stock fell more than 2% to about $255, after the Centers for Medicare & Medicaid Services (CMS) determined that Biogen's Alzheimer's drug Aduhelm will be limited to Medicare recipients who are willing to enroll in qualifying clinical trials. Although we were disappointed by the CMS' decision, we provided in a note that day three reasons why we were not making any changes to our positive long-term view of Eli Lilly's multibillion-dollar opportunity in Alzheimer's, and why we thought the pullback represented a good time to buy. Well, the selling in Eli Lilly continued in the days after our Jan. 12 note, and even though the stock has rebounded slightly this week, shares are still off about $16 per share from the CMS decision. The recent decline in LLY has brought the stock price to a very interesting level. Before the past few days, the last time LLY traded under $250 was Dec. 14, the day before the company's excellent Investor Day that sent the stock surging 10% to about $275 in a single day. As a brief recap of the event, management raised its full year 2021 revenue and earnings per share guidance and provided a 2022 outlook that was much stronger than expected. Furthermore, management showcased a pipeline that we believe is the most valuable in the entire industry, headlined by tirzepatide for Type 2 diabetes and obesity and donanemab for Alzheimer's. B