Scottish Mortgage sells out of Illumina

investmentweek.co.uk:

Tom Slater (pictured), lead manager on Scottish Mortgage investment trust

Speaking to clients on its latest 'Manager Update' Q/A on Wednesday (1 November), SMT's lead manager Tom Slater confirmed that they had sold out of the gene sequencing firm.

The managers first took a position in the company in March 2011 and in 2016 it was the second biggest holding in the trust.

Slater and the trust's co-manager, Lawrence Burns, cut back the position in Illumina earlier this year and as of 30 September, it made up 0.7% of the portfolio, according to the latest half-year report.

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At that time, the managers said that they continued to believe in the investment opportunity of gene-sequencing, but said Illumina's execution had been «disappointing», which has been reflected in a weak share price.

In the intervening month, the pair pulled SMT's investment in the company altogether and, on the recent call, Slater said the changes in the company's management had been another trigger to sell the stock.

«The execution at Illumina in recent years has been disappointing. You have seen a management change there. But we do not think there were any quick fixes,» Slater said.

The company's board chair was ousted at the John Thompson back in May, while the CEO Fracis deSpuza held onto his seat the time he resigned from the role after shareholder pressure, who voted in Jacob Thaysen as a replacement in September.

«And at a time where you think about edge, you think about competition in those markets and where there are real challenges. I think it is important to accept the there is ones that just have not turned out how you hoped, so you sell and move on,» Slater said.