Here’s Why Polen Focus Growth Sold Illumina (ILMN)
Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the quarter the fund returned 14.43% (net) compared to 14.16% for the Russell 1000 Growth Index and 11.69% for the S&P 500 Index. For the full year, the fund returned 38.99% (net) compared to 42.68% and 26.29% returns for the indexes. The firm had the second-highest return in the Portfolio's 35-year history in 2023. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Polen Focus Growth Strategy featured stocks such as Illumina, Inc. (NASDAQ:ILMN) in the fourth quarter 2023 investor letter. Headquartered in San Diego, California, Illumina, Inc. (NASDAQ:ILMN) is a life science tools and integrated systems manufacturer. On January 18, 2024, Illumina, Inc. (NASDAQ:ILMN) stock closed at $134.24 per share. One-month return of Illumina, Inc. (NASDAQ:ILMN) was -4.11%, and its shares lost 34.32% of their value over the last 52 weeks. Illumina, Inc. (NASDAQ:ILMN) has a market capitalization of $21.317 billion.
Polen Focus Growth Strategy stated the following regarding Illumina, Inc. (NASDAQ:ILMN) in its fourth quarter 2023 investor letter:
"We eliminated our position in Illumina, Inc. (NASDAQ:ILMN). We described the series of unfortunate events, some self-inflected and some not, that Illumina and its shareholders have grappled with in our last quarterly commentary. The core business of Illumina is growing slower than we expected, most likely due to macroeconomic reasons, but we also are seeing increased competition, especially in China. The launch of the company’s new sequencing technology has not been enough to overcome the macro weakness, and this may continue to be the case for some time if the macro environment weakens further. Illumina’s new CEO recently stated that he expects 2024 to be another year of flattish growth. Competition has also increased in Western markets, particularly for mid-throughput sequencers that need to be monitored, but at this point, we do not believe there is enough data to conclude that the slow growth of its core business is a competitive issue.
In addition, the situation with its acquisition of Grail has been a distraction for management and the core business. A divestiture is highly likely in the next few quarters, but depending on the method of divestiture, it is possible that Illumina may need to provide significant capital to Grail, which could weaken the balance sheet and require cash that could otherwise be reinvested into the core business.
We will monitor Illumina going forward as we like the core business, its competitive position, and the long-term growth opportunity. We would want to see the core business re-accelerate to double digit growth, Grail divested in a way that doesn’t negatively impact shareholders (i.e., saddled with debt or with a large share issuance), and the competitive environment to remain benign outside of China."
A research facility with medical professionals surrounded by diagnostic equipment.
Illumina, Inc. (NASDAQ:ILMN) is not our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Illumina, Inc. (NASDAQ:ILMN) at the end of third quarter which was 43 in the previous quarter.
We discussed Illumina, Inc. (NASDAQ:ILMN) in another article and shared Ensemble Capital Management's views on the company. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
