Mott Capital Management, LLC on Illumina, Inc.
Thesis
Mott Capital invested in Illumina ahead of a possible reacceleration in the company’s growth. The share price rose sharply during the quarter as other investors began to anticipate that improvement. Because the stock had already appreciated considerably from the fund’s entry price, Michael Kramer reduced the position to realize some gains. The letter thus presents a continuing growth-recovery idea but one with less compelling upside after the rally.
“Illumina’s stock also rose sharply during the quarter as investors looked toward a re-acceleration in its growth.”
Key risks
- The anticipated reacceleration in growth may not materialize.
- The sharp share-price appreciation since purchase reduces the margin for disappointment.
- Further share-price volatility following the substantial run-up.