The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Illumina, Inc. (NASDAQ:ILMN) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is Illumina, Inc. (NASDAQ:ILMN) a marvelous investment right now? The best stock pickers were becoming less hopeful. The number of long hedge fund bets were trimmed by 1 in recent months. Illumina, Inc. (NASDAQ:ILMN) was in 51 hedge funds’ portfolios at the end of the second quarter of 2021. 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 Q2 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
David Blood of Generation Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. 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. 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 homepage. With all of this in mind 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 Q2’s end, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ILMN over the last 24 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, GuardCap Asset Management, managed by Guardian Capital, holds the number one position in Illumina, Inc. (NASDAQ:ILMN). GuardCap Asset Management has a $580.7 million position in the stock, comprising 8.4% of its 13F portfolio. Sitting at the No. 2 spot is Generation Investment Management, led by David Blood and Al Gore, holding a $518.3 million position; 2.1% of its 13F portfolio is allocated to the company. Other peers with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Robert Joseph Caruso’s Select Equity Group and Suzi Nutton (CEO)’s Lansdowne Partners. In terms of the portfolio weights assigned to each position Andar Capital allocated the biggest weight to Illumina, Inc. (NASDAQ:ILMN), around 9.04% of its 13F portfolio. GuardCap Asset Management is also relatively very bullish on the stock, dishing out 8.38 percent of its 13F equity portfolio to ILMN.
Because Illumina, Inc. (NASDAQ:ILMN) has experienced declining sentiment from the smart money, we can see that there lies a certain “tier” of fund managers that decided to sell off their full holdings heading into Q3. Intriguingly, Renaissance Technologies dumped the biggest investment of the 750 funds watched by Insider Monkey, comprising close to $52.4 million in stock. D. E. Shaw’s fund, D E Shaw, also said goodbye to its stock, about $21.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds heading into Q3.
Let’s also examine hedge fund activity in other stocks similar to Illumina, Inc. (NASDAQ:ILMN). We will take a look at Equinor ASA (NYSE:EQNR), Colgate-Palmolive Company (NYSE:CL), The Blackstone Group Inc. (NYSE:BX), HCA Healthcare Inc (NYSE:HCA), ABB Ltd (NYSE:ABB), Twilio Inc. (NYSE:TWLO), and Moody’s Corporation (NYSE:MCO). All of these 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 |
|---|---|---|---|
| EQNR | 11 | 88633 | 3 |
| CL | 58 | 2368869 | 10 |
| BX | 54 | 2080104 | 5 |
| HCA | 60 | 2695782 | -2 |
| ABB | 15 | 658036 | 4 |
| TWLO | 98 | 7891057 | -1 |
| MCO | 44 | 16046255 | -11 |
| Average | 48.6 | 4546962 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.6 hedge funds with bullish positions and the average amount invested in these stocks was $4547 million. That figure was $1973 million in ILMN’s case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Equinor ASA (NYSE:EQNR) is the least popular one with only 11 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 51.7. 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 through November 5th and beat the market again by 3.1 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 -13.8% since the end of June (through 11/5) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
