Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Illumina, Inc. (NASDAQ:ILMN) based on that data and determine whether they were really smart about the stock.
Illumina, Inc. (NASDAQ:ILMN) shareholders have witnessed an increase in hedge fund sentiment lately. Illumina, Inc. (NASDAQ:ILMN) was in 55 hedge funds’ portfolios at the end of September. The all time high for this statistic is 62. Our calculations also showed that ILMN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks 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. Now let’s take a gander at the recent hedge fund action regarding Illumina, Inc. (NASDAQ:ILMN).
Do Hedge Funds Think ILMN Is A Good Stock To Buy Now?
At third quarter’s end, a total of 55 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in ILMN over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, GuardCap Asset Management was the largest shareholder of Illumina, Inc. (NASDAQ:ILMN), with a stake worth $534 million reported as of the end of September. Trailing GuardCap Asset Management was Generation Investment Management, which amassed a stake valued at $378.2 million. Two Sigma Advisors, Arrowstreet Capital, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position GuardCap Asset Management allocated the biggest weight to Illumina, Inc. (NASDAQ:ILMN), around 7.35% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, designating 7.07 percent of its 13F equity portfolio to ILMN.
As aggregate interest increased, some big names were leading the bulls’ herd. Renaissance Technologies, initiated the largest position in Illumina, Inc. (NASDAQ:ILMN). Renaissance Technologies had $172 million invested in the company at the end of the quarter. Lei Zhang’s Hillhouse Capital Management also made a $68 million investment in the stock during the quarter. The following funds were also among the new ILMN investors: Andreas Halvorsen’s Viking Global, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Jinghua Yan’s TwinBeech Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Illumina, Inc. (NASDAQ:ILMN) but similarly valued. These stocks are Waste Management, Inc. (NYSE:WM), Autodesk, Inc. (NASDAQ:ADSK), Banco Santander, S.A. (NYSE:SAN), VMware, Inc. (NYSE:VMW), Workday Inc (NYSE:WDAY), Boston Scientific Corporation (NYSE:BSX), and Activision Blizzard, Inc. (NASDAQ:ATVI). This group of stocks’ market caps are similar to ILMN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WM | 36 | 3629155 | -3 |
| ADSK | 54 | 2356939 | -10 |
| SAN | 14 | 543799 | -3 |
| VMW | 31 | 618586 | 3 |
| WDAY | 72 | 6389641 | 0 |
| BSX | 47 | 3051321 | -4 |
| ATVI | 80 | 4284643 | 2 |
| Average | 47.7 | 2982012 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 47.7 hedge funds with bullish positions and the average amount invested in these stocks was $2982 million. That figure was $2801 million in ILMN’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 14 bullish hedge fund positions. Illumina, Inc. (NASDAQ:ILMN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ILMN is 66.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, ILMN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ILMN were disappointed as the stock returned -14% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
