Is Illumina, Inc. (NASDAQ:ILMN) Going to Burn These Hedge Funds?

Illumina, Inc. (NASDAQ:ILMN) was in 35 hedge funds’ portfolio at the end of December. ilmn shareholders have witnessed an increase in enthusiasm from smart money lately. There were 26 hedge funds in our database with ilmn positions at the end of the previous quarter.

Illumina, Inc. (NASDAQ:ILMN)

If you’d ask most shareholders, hedge funds are seen as slow, old financial tools of the past. While there are over 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the leaders of this group, close to 450 funds. Most estimates calculate that this group has its hands on the majority of the smart money’s total capital, and by monitoring their highest performing picks, we have found a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Just as integral, optimistic insider trading activity is a second way to parse down the world of equities. Obviously, there are plenty of motivations for a corporate insider to get rid of shares of his or her company, but only one, very simple reason why they would behave bullishly. Plenty of academic studies have demonstrated the useful potential of this strategy if piggybackers know where to look (learn more here).

Consequently, we’re going to take a peek at the recent action surrounding Illumina, Inc. (NASDAQ:ILMN).

What have hedge funds been doing with Illumina, Inc. (NASDAQ:ILMN)?

At year’s end, a total of 35 of the hedge funds we track held long positions in this stock, a change of 35% from the third quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Jérôme Pfund and Michael Sjöström’s Sectoral Asset Management had the most valuable position in Illumina, Inc. (NASDAQ:ILMN), worth close to $105 million billion, comprising 3.7% of its total 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $104 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include Samuel Isaly’s OrbiMed Advisors, Dan Loeb’s Third Point and Jonathon Jacobson’s Highfields Capital Management.

Now, key hedge funds have jumped into Illumina, Inc. (NASDAQ:ILMN) headfirst. Third Point, managed by Dan Loeb, initiated the most valuable position in Illumina, Inc. (NASDAQ:ILMN). Third Point had 83 million invested in the company at the end of the quarter. Rob Citrone’s Discovery Capital Management also initiated a $58 million position during the quarter. The following funds were also among the new ilmn investors: Arthur B Cohen and Joseph Healey’s Healthcor Management LP, Pasco Alfaro / Richard Tumure’s Miura Global Management, and Jacob Gottlieb’s Visium Asset Management.

What have insiders been doing with Illumina, Inc. (NASDAQ:ILMN)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past six months. Over the latest half-year time frame, Illumina, Inc. (NASDAQ:ILMN) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

With the returns shown by Insider Monkey’s studies, retail investors should always monitor hedge fund and insider trading sentiment, and Illumina, Inc. (NASDAQ:ILMN) is no exception.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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