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Is Illumina (ILMN) a Smart Long-term Buy?

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Alex Smith
·3 min read
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Baron Asset Fund recently published its third-quarter commentary – a copy of which can be downloaded here. During the third quarter of 2020, the Baron Asset Fund returned 8.43% (institutional shares). In comparison, the benchmark S&P 500 Index was up 8.93%, while the Russell Midcap Growth Index was up 9.37%. You should check out Baron Asset Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q3 2020 Investor Letter, Baron Asset Fund highlighted a few stocks and Illumina Inc. (NASDAQ:ILMN) is one of them. Illumina Inc. (NASDAQ:ILMN) is a biotechnology company. Year-to-date, Illumina Inc. (NASDAQ:ILMN) stock gained 3.3% and on December 7th it had a closing price of $342.82. Here is what Baron Asset Fund said:

"Illumina, Inc. is the leading manufacturer of DNA sequencing systems for genetic analysis. Shares fell as lower utilization of the company’s systems during COVID-19 led to disappointing second quarter financial results. Illumina also announced the acquisition of Grail, which is developing a blood test for early stage cancer detection. Investors responded negatively to the acquisition because of substantial near-term earnings dilution and concerns about competition with Illumina’s customers. Although we appreciate these concerns, we believe the Grail investment offers the potential for significant long-term value creation in the rapidly growing market for early cancer screening."

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Tonhom1009/Shutterstock.com

In October, we published an article revealing that Bonsai Partners is bullish on Illumina Inc. (NASDAQ:ILMN) stock. The investment firm's thesis remains intact and is not concerned by the short-term sales difficulties caused by closed labs and constrained research budgets.

In Q2 2020, the number of bullish hedge fund positions on Illumina Inc. (NASDAQ:ILMN) stock increased by about 21% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Illumina's growth potential. Our calculations showed that Illumina Inc. (NASDAQ:ILMN) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website:

Disclosure: None. This article is originally published at Insider Monkey.