According to its latest 13G filing, Andreas Halvorsen’s Viking Global reduced its stake in Illumina Inc (NASDAQ:ILMN) by 461,100 shares. The hedge fund now holds around 8.18 million shares, representing 5.8% of the company’s outstanding common stock. Hence, the firm only reduced its exposure to the stock by a relatively small amount, suggesting it remains bullish regarding Illumina’s future performance.
As a privately owned hedge fund sponsor, Viking Global acts primarily as a service provider for investment vehicles. The firm was founded in 1999 by former Tiger employees Andreas Halvorsen, David Ott, and Brian Olson. Despite their role as co-founders, Mr Olson and Mr Ott left Viking in 2005 and 2010 respectively, leaving Mr Halvorsen in charge of the firm. The Connecticut-based fund favors the public equity and hedging markets for its investments, employing a long/short global equity strategy with a bottom-up stock picking approach. Although companies from the healthcare sector make up more than 30% of Viking Global’s equity portfolio, which is valued at around $24.9 billion, the rest of its holdings are highly diversified. Illumina stock accounts for more than 5% of the hedge fund’s equity portfolio, making it the firm’s largest holding one of the top picks throughout 2014. Overall, Viking has a great track record of returns with its flagship fund posting gains of 23% during 2013, while its top five largest holdings returned 0.84% per month from 2002 to 2012, beating the S&P 500 by more than 6% per year throughout the same period.
Illumina Inc (NASDAQ:ILMN) is a $26.74 billion market cap healthcare firm that specializes in the development, manufacture, and marketing of life science tools and integrated systems for the analysis of genetic variations. Its products include sequencing platforms that are based on its SBS technology, array platforms consisting of HiScan and iScan systems, and sample preparation and sequencing kits, which are designed to make analysis more efficient. In addition, the company provides genotyping services to genomic research centers, academic institutions, government laboratories, hospitals, and reference laboratories around the globe. Considering Viking Global’s preference for healthcare stocks, it comes as little surprise that the fund’s most important positions are found in this industry. Illumina stock accounts for more than 5% of the hedge fund’s equity portfolio, making it the firm’s largest holding.
A quick glance at the price of Illumina Inc (NASDAQ:ILMN) shares reveals the possible motivation behind the reduction in Viking Global’s stake in the healthcare giant. However, taking into account the relatively small amount of shares sold, it seems unlikely that the fund was looking to profit from the sale, but rather seeking to rebalance its equity portfolio. This seems far more plausible considering the firm’s stake in Illumina is already very large, thus leaving it exposed to unnecessary risks.
One thing seems certain: Viking Global remains bullish on Illumina. After all, shareholders are excited regarding the company’s future, which seems bright following the recently announced 15-year lease of a 360,000 square feet lab, intended for a huge BioMed project in Foster City. Furthermore, the company not only achieved a solid third-quarter in 2014, but also presented an optimistic full-year outlook for both top- and bottom-line growth. Viking Global’s largest holding is also set to launch several new products, which will expand Illumina’s portfolio significantly. Hence, much to the relief of Mr Halvorsen, raising his hedge fund’s stake in the healthcare company by more than 400% in 2014 seems justified. Taking the optimistic outlook for 2015 into account, and the fact that the stock grew by more than 71% over the past year, Viking Global will surely benefit from holding on to the largest position in its equity portfolio.
In addition to the large position held by Viking Global, Illumina Inc (NASDAQ:ILMN) enjoys the backing of numerous institutional shareholders. Samuel Isaly’s health care fund Orbimed Advisors for example, disclosed a position in the company of 1.34 million shares last quarter. Another fund displaying a bullish stance towards Illumina is David Goel and Paul Ferri’s Matrix Capital Management, with a stake of 900,000 shares, representing a whopping 7.9% of the firm’s equity portfolio. David E. Shaw’s D E Shaw also became interested in the company last quarter, increasing its exposure to the healthcare firm by 60% and thus bringing its total holdings to 748,400 shares.
Disclosure: Pablo Erbar holds no position in any stocks or funds mentioned.
