Ensemble Capital, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be seen here. While this recent quarter represents the fund’s largest degree of underperformance, so too did its 2020 results. In 2020 the Fund was up 30.89% vs the S&P 500 up 18.39% for 12.51% outperformance. It is clear to us that the pandemic has caused much larger and more rapid relative swings in asset pricing as investors struggle to grapple with the implications of an economic event of an unprecedented nature. In this context, you can see that the fund’s first-quarter underperformance of 11.03% is clearly a bad outcome, and yet is not inconsistent with other periods of weak performance that have occurred in the context of its long-term track record of outperformance. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Ensemble Capital mentioned Illumina, Inc. (NASDAQ:ILMN) and explained its insights for the company. Founded in 1998, Illumina, Inc. (NASDAQ:ILMN) is a San Diego, California-based biotechnology company with a $54.0 billion market capitalization. Illumina, Inc. (NASDAQ:ILMN) delivered a -9.53% return since the beginning of the year, while its 12-month returns are down by -15.73%. The stock closed at $344.17 per share on April 20, 2022.
Here is what Ensemble Capital has to say about Illumina, Inc. (NASDAQ:ILMN) in its Q1 2022 investor letter:
“Illumina (7.6% weight in the Fund): The far and away leader in genetic sequencing equipment, used to develop the COVID mRNA vaccines, has a 90% market share. As the dominant provider of one of the most fundamental tools in genetic research and clinical applications, the company can essentially set any price they choose to for their equipment. However, the company recognizes that the big opportunity is not to squeeze customers today, but rather to relentlessly work to improve their technology and reduce the price in order to spur along massive increased usage. But while their goal is to bring down the cost of sequencing, this is a strategic choice on their part, not something they are forced to do via competition. We are confident that to the degree the company faces increased costs, they can raise prices to fully offset these increases and ensure that their profits are inflated along with the general level of prices across the economy.”
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Our calculations show that Illumina, Inc. (NASDAQ:ILMN) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Illumina, Inc. (NASDAQ:ILMN) was in 53 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 55 funds in the previous quarter. Illumina, Inc. (NASDAQ:ILMN) delivered a -9.53% return in the past 3 months.
In February 2022, we also shared another hedge fund’s views on Illumina, Inc. (NASDAQ:ILMN) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
