Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. Optimism started to prevail, during the last months of the year, and investors reacted positively to news of a potential change in direction by the US Federal Reserve, as well as indications that the US economy is heading for a soft landing. In the fourth quarter, the fund returned 8.80% (net) compared to a 13.3% return for the Russell 2500 Index. Furthermore, the fund underperformed its secondary benchmark, the Russell 2500 Value Index, which returned 13.76% during the same period. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Meridian Contrarian Fund featured stocks like SMART Global Holdings, Inc. (NASDAQ:SGH) in the third quarter 2023 investor letter. Headquartered in Milpitas, California, SMART Global Holdings, Inc. (NASDAQ:SGH) provides specialty memory solutions. On April 2, 2024, SMART Global Holdings, Inc. (NASDAQ:SGH) stock closed at $26.16 per share. One-month return of SMART Global Holdings, Inc. (NASDAQ:SGH) was 11.13%, and its shares gained 50.43% of their value over the last 52 weeks. SMART Global Holdings, Inc. (NASDAQ:SGH) has a market capitalization of $1.356 billion.
Meridian Contrarian Fund stated the following regarding SMART Global Holdings, Inc. (NASDAQ:SGH) in its fourth quarter 2023 investor letter:
“SMART Global Holdings, Inc. (NASDAQ:SGH) is a diversified technology company with leading market positions in memory, LEDs, high-performance computing (HPC), and the Internet of Things (IoT). Our interest was piqued when the company hit a rough patch in 2019-early 2020 as several factors led to an earnings decline. Volatility in its memory business caused by weakness in Brazil, new product investments the company had made ahead of revenue, and order delays in its HPC business all converged. While none of these developments is particularly unusual, it is uncommon for all three to turn negative at the same time. Our thesis was that the company’s impressive new management team could not only smooth out some of the volatility in the business, but also drive growth through superior capital allocation and organic investment. With the stock trading at less than 8x earnings at the time of our investment (Q3 2020), we believed the risk/reward was excellent. The stock, one of our strongest performers early in 2023, was weak in the quarter due to disappointing earnings results and management guidance. Following the HPC division’s largest contract in company history earlier in the year, the company was unable to generate enough new business to offset the tough comparison. Our research indicates that Smart Global remains a leader in HPC implementation for AI, a market that remains strong. The company is enhancing its go-to-market strategy to better position it for growth, including the hiring of a new head of sales. We believe the long-term risk/reward is still strong and took advantage of the price decline to increase our position during the quarter.”
An array of LED lights illuminating a video wall, showcasing the company’s capabilities.
SMART Global Holdings, Inc. (NASDAQ:SGH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, SMART Global Holdings, Inc. (NASDAQ:SGH) was held by 20 hedge fund portfolios, compared to 22 in the previous quarter, according to our database.
We discussed SMART Global Holdings, Inc. (NASDAQ:SGH) in another article and shared Meridian Contrarian Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
