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.