Eli Lilly (LLY) Drives Q4 Gains as Pharma Fundamentals Shine Amid Sector Rotation

Polen Capital Management Llc released its "Polen Focus Growth Strategy" Q4 2025 investor letter. A copy of the letter can be downloaded here. In Q4 2025, the Polen Focus Growth strategy delivered a -1.37% gross return, underperforming the Russell 1000 Growth Index (+1.12%) and the S&P 500 (+2.66%), as concentrated mega‑cap leadership and AI valuation concerns drove market volatility. The fund faced headwinds from market rotation and valuation pressures but remained disciplined in its investment approach, focusing on companies with durable competitive advantages and diversified earnings. Portfolio adjustments were made to optimize long-term growth potential, and despite short-term challenges, the fund maintains a constructive medium- to long-term outlook, expecting broader market opportunities beyond narrow leadership trends to support balanced returns for investors. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its fourth-quarter 2025 investor letter, Polen Capital Management highlighted stocks like Eli Lilly and Company (NYSE:LLY). Eli Lilly and Company (NYSE:LLY) is a leading global pharmaceutical firm with strong growth in key therapeutic areas and robust financial results. The one-month return of Eli Lilly and Company (NYSE:LLY) was -1.20% while its shares traded between $623.78 and $1,133.95 over the last 52 weeks. On January 27, 2026, Eli Lilly and Company (NYSE:LLY) stock closed at approximately $1,039.51 per share, with a market capitalization of about $931.876 billion.

Polen Capital Management stated the following regarding Eli Lilly and Company (NYSE:LLY) in its Polen Focus Growth Strategy's Q4 2025 investor letter:

In Q4 2025, the Portfolio returned -1.4% compared to +1.1% for the Index. Top relative contributors to the Portfolio’s performance included Eli Lilly and Company (NYSE:LLY), Meta (not owned), and Shopify. The top absolute contributors were Eli Lilly, Alphabet, and Amazon. Eli Lilly was the top performing relative contributor in Q4. Lilly’s stock price has underperformed this year, much of it on the back of drug pricing concerns, potential tariff impacts and, perhaps, less enthusiasm for GLP-1 drugs. However, the stock rallied over 40% in Q4 driven by strong financial results, strengthening market leadership in key business segments, along with reaching an agreement with the White House that while lowering GLP-1 drug prices will greatly increase the addressable market in the U.S. and should allow for a long runway of future growth ahead.

Eli Lilly and Company (NYSE:LLY) is in 21st position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 114 hedge fund portfolios held Eli Lilly and Company (NYSE:LLY) at the end of the third quarter, which was 119 in the previous quarter. While we acknowledge the risk and potential of Eli Lilly and Company (NYSE:LLY) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Eli Lilly and Company (NYSE:LLY) and shared the list of the best US stocks to buy and hold in 2026. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.