RiverPark Funds, an investment management firm, published its “RiverPark Large Growth Fund” second quarter 2021 investor letter – a copy of which can be downloaded here. The RiverPark Large Growth Fund (the “Fund”) returned 13.1% for the second quarter of 2021, while its benchmarks, the S&P 500 Total Return Index (“S&P”) advanced 8.5%, the Russell 1000 Growth Total Return Index (“RLG”) returned 11.9%, while the Russell 1000 Value Total Return Index returned 5.2%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
In the Q2 2021 investor letter of RiverPark Funds, the fund mentioned Illumina, Inc. (NASDAQ: ILMN), and discussed its stance on the firm. Illumina, Inc. Inc. is a San Diego, California-based biotechnology company, that currently has a $72.5 billion market capitalization. ILMN delivered a 34.39% return since the beginning of the year, extending its 12-month returns to 39.81%. The stock closed at $497.24 per share on August 06, 2021.
Here is what RiverPark Funds has to say about Illumina, Inc. in its Q2 2021 investor letter:
“ILMN shares were our final top contributor for the quarter, rebounding from a decline in March due to the FTC filing a complaint to block the company’s acquisition of Grail. In April, Illumina reported better-than-expected results and a strong outlook. ILMN revenue grew 27%, with Sequencing revenue up 29%, instrument revenue up 123% and consumables up 26%. Adjusted operating margin grew sequentially to 32.1% from 20.9% in 4Q20, significantly exceeding estimates. Management also increased its full-year 2021 revenue growth guidance from its previous 17%-20% growth (we previously wrote we thought it to be conservative) to 25%-28%.
We continue to view the company’s core genomics industry as offering one of the larger total addressable markets that we cover, and ILMN is the clear innovation leader in sequencing and array-based solutions for genetic analysis. With less than 0.02% of humans having been sequenced and 99% of the variants discovered in the genome having not yet been deciphered, Illumina, at only $3.5 billion of TTM revenue, is still in its infancy in what is potentially a greater than $50 billion genetics analysis tools market opportunity. With Illumina’s recent entrance into the potentially even larger liquid biopsy market (early-stage cancer screening via blood samples) through its acquisition of Grail, the company has two large growth opportunities ahead.”
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Based on our calculations, Illumina, Inc. (NASDAQ: ILMN) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. ILMN was in 52 hedge fund portfolios at the end of the first quarter of 2021, compared to 45 funds in the fourth quarter of 2020. Illumina, Inc. (NASDAQ: ILMN) delivered a 29.51% return in the past 3 months.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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Disclosure: None. This article is originally published at Insider Monkey.
