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1 Sell, 3 Buys

June 16, 2024
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Wiko Steyn
Author
Wiko Steyn

Core Fund Update 13

 

Sometimes a stock falls into the just too hard pile. Your original conviction starts dwindling and it becomes a difficult recommendation.

Illumina has been the global leader in DNA sequencing and genomic testing for more than a decade. Illumina's reign in DNA sequencing can be traced back to 2007 when they bought Solexa. At the time, the price of sequencing a human genome was estimated to be $1 million. Today, companies like Illumina have brought the price down to about $100, a remarkable achievement and a massive enabler for many healthcare advancements.

Illumina currently has a monopoly on the Next-Generation Sequencing owning about 80% market share globally. They have successfully managed to eliminate most of their competition, often simply by buying the competition. Now it seems like a new acquisition might actually lead to the derailing of the company.  Illumina is acquiring GRAIL or at least it is attempting to. Illumina is facing a massive antitrust battle and it seems like the Federal Trade Commission is tiring of their dominance and monopolistic buys. The sad part is that GRAIL was spun off from Illumina in 2016 and they are now trying to acquire it for much more than what they received 6 years ago. 

Although we are still bullish on genomics, the competition is becoming fierce and this regulatory battle has prompted us to reevaluate our holding. Selling a stock is always a difficult decision and it should never be prompted by share price movement. Illumina's investment thesis is getting tested on several fronts and we feel the market is presenting us with plenty of quality growth stocks on sale. We will be on the lookout for our replacement pick in the coming weeks. 

 

Portfolio Update Summary

Wow, we are back in free-fall mode after the latest interest rate hike from the federal reserve. Our Core Fund has turned red again and the market is showing maximum bearish sentiment. Retail investors like ourselves do not have access to all the data, analysis and tools that professional investors have, so how can we possibly think that we can outperform them? We have time on our sides and our performance is not evaluated on a quarterly basis. This might not sound like much but it creates the potential for real wealth creation.

We have added to our data, semiconductor and cybersecurity stocks namely MongoDB, ASML and Crowdstrike, bringing all three to a full position. In other news, Adobe has bought Figma for a massive $20B and Mr Market is clearly not happy. What gives? Adobe simply overpaid for a company that is only generating $400M. This is clearly a long-term move before Figma becomes a dominant force and starts eating Adobe's market share. $20B is a hard pill to swallow.  We still have faith in management and will be holding onto our position for now.  

  • Sell  $714 ILMN at $202.50
  • Buy $250 MDB at $198.90
  • Buy $250 ASML at $441.77
  • Buy $250 CRWD at $160.42


 

Disclosure

This article is not financial advice and is based on the author's opinion. This article is not a research report and is not intended to serve as the basis for any investment decision. All investments involve risk, and a financial product's past performance does not guarantee future returns. Investors have to conduct their own research before conducting any transaction. There is always the risk of losing parts or all of your money when you invest in securities or other financial products. The $20K in the Core Fund is not real money and only a demonstration of a typical portfolio. This is an actively managed portfolio, where we will buy and sell positions as we deem fit without any regard for taxation. Remember, all selling of stocks triggers a tax event in most countries and it is the investors personal responsibility to always remain tax compliant.

 


 


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