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Is Merck and Co. (MRK) A Smart Long-Term Buy?

·3 min read

Artisan Partners, a high value-added investment management firm, published its "Artisan Value Fund" first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 10.78% was recorded by its Investor Class: ARTLX, 10.76% by its Advisor Class: APDLX, and 10.75% by its Institutional Class: APHLX for the first quarter of 2021, all below the Russell 1000® Value Index that delivered an 11.26% return, but outperforming the Russell 1000® Index that gained 5.91% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Artisan Partners, in its Q1 2021 investor letter, mentioned Merck & Co., Inc. (NYSE: MRK), and shared their insights on the company. Merck & Co., Inc. is a Kenilworth, New Jersey-based pharmaceutical company that currently has a $192.1 billion market capitalization. Since the beginning of the year, MRK delivered a -7.22% return, while its 12-month returns are down by -4.61%. As of May 28, 2021, the stock closed at $75.89 per share.

Here is what Artisan Partners has to say about Merck & Co., Inc. in its Q1 2021 investor letter:

"In Q1, we initiated a position in Merck, a provider of health care solutions including prescription medicines, vaccines, biologic therapies, animal health and consumer care products. We purchased Merck when the stock came under pressure in part on concerns that the newly minted Biden administration could implement regulatory changes and lower drug costs in the pharmaceutical industry. Recent, but anticipated changes to Merck’s management team have also weighed on shares, as have concerns over the company’s heavy reliance on immunotherapy treatment Keytruda. Notably, Merck is not getting much credit from investors for the 60+ programs it has in clinical development, despite having several solid and large new product opportunities. Additionally, the company’s strong balance sheet and robust free cash flow provide it multiple options for future partnerships and acquisitions. While Merck is undergoing a period of transition, we think the company’s fundamentals are strong and believe changes to management should be a catalyst for improvement."

17 Countries With Universal Health Care in 2017
17 Countries With Universal Health Care in 2017

Yuganov Konstantin/Shutterstock.com

Our calculations show that Merck & Co., Inc. (NYSE: MRK) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the first quarter of 2021, Merck & Co., Inc. was in 79 hedge fund portfolios, compared to 82 funds in the fourth quarter of 2020. MRK delivered a 4.85% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

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