Illumina, Inc. (NASDAQ:ILMN) is a health care company that is the leader in platforms used for DNA sequencing, the process of determining the precise order of nucleotides with a DNA molecule. Illumina provides the tools used for over 90% of the world’s sequencing output. Illumina is benefiting from a major shift into personalized medicine driven by DNA sequencing. It is already becoming common practice to sequence a cancerous tumor and prescribe drugs targeting the genetic mutations specific to that cancer. In the reproductive health arena, DNA sequencing is being used to help identify chromosomal abnormalities early in a pregnancy.
When we bought Illumina in 2011, the stock had been decimated by two missed quarters, reduced guidance, and the threat of a government shutdown (at the time, roughly one-third of revenue was from academic research, which relies on federal funding). None of this had to do with Illumina’s competitive advantages or potential growth opportunities. We took advantage of the selloff to establish a position. The stock has appreciated more than 300% in the time we have owned it.
From Baron Funds' Summer 2016 Newsletter.
