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Patient Capital Management, a value investing firm, released its “Patient Capital Opportunity Equity Strategy” first quarter 2025 investor letter. A copy of the letter can be downloaded here. 2025 got out to a solid start with the market hitting all-time highs in mid-February. However, a dramatic reversal pushed the S&P 500 down 8.7%, closing the quarter down 4.3%. During the quarter, the strategy returned -9.5% net of fees compared to the S&P 500’s -4.3% return. According to a three-factor performance attribution model, allocation and interaction effects contributed positively to the portfolio’s performance, which were partially offset by selection effects. In addition, you can check the fund’s top 5 holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Patient Capital Opportunity Equity Strategy highlighted stocks such as Illumina, Inc. (NASDAQ:ILMN). Illumina, Inc. (NASDAQ:ILMN) offers sequencing- and array-based solutions for genetic and genomic analysis. The one-month return of Illumina, Inc. (NASDAQ:ILMN) was -7.33%, and its shares lost 35.18% of their value over the last 52 weeks. On April 23, 2025, Illumina, Inc. (NASDAQ:ILMN) stock closed at $76.25 per share with a market capitalization of $12.07 billion.
Patient Capital Opportunity Equity Strategy stated the following regarding Illumina, Inc. (NASDAQ:ILMN) in its Q1 2025 investor letter:
"Illumina, Inc. (NASDAQ:ILMN) faced several headwinds that pushed the stock down throughout the quarter related to government policy changes. In early February, the company was blacklisted by China, further NIH funding cuts put incremental demand at risk and a new competitive entrant from Roche raised questions about long-term market share. However, we believe these headlines are fully discounted at the current price. The company has already lowered guidance to account for the 7% revenue loss from China while initiating a $100M cost savings program to cover the shortfall. NIH funding constraints have been an industry-wide challenge for well over a year, and while the company continues to face new competition, they have been able to maintain their market share at ~80%. While there are certainly headwinds, we believe Illumina is a market leader well positioned to continue to grow over the long-term as genome sequencing and AI play larger roles in scientific advancement and drug discovery. With the stock now trading at just 16x forward earnings, we see an opportunity to own a high-quality asset with significant future growth potential at a discount to the broader market."