Illumina Board Under Siege by Carl Icahn

“Illumina’s acquisition of GRAIL seems to have fallen through which means they wasted a great deal of resources as a result of consistently bad decision-making.” That’s the conclusion we reached six months ago in an article on Illumina (ILMN) titled, Illumina Stock Falls on GRAIL Acquisition Fail. While we typically check in with our stocks once per year, Illumina has been frequently in the news because activist shareholder Carl Icahn has directed his attention towards a firm he believes is breaching their fiduciary responsibility to investors. Given ILMN is our second largest position, we wanted to better understand what’s happening.

Icahn at the Gates

Unless you work in finance, you’d be excused for not knowing anything about living legend Carl Icahn who is one of the original, and perhaps most notable, activist shareholders there is. His reputation as a ruthless corporate raider in the 80s, along with his vast wealth ($17 to $24 billion, they say), have led many in the financial world to see him as a formidable adversary you don’t want to come up against. Love him or hate him (and plenty do), Icahn knocking at the door is generally seen as a good thing for shareholders. The “Icahn Lift” refers to the positive effect on the share price of a company observed when Icahn starts building a meaningful position. It’s why Illumina shares jumped 17% when news broke that the barbarians were at the gate.

Per tradition, Mr. Icahn publishes letters to shareholders outlining the problems he sees in c

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