Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. During the quarter, the significant market influences were the U.S. election results, inflation, and the direction of interest rates. Against this backdrop, the fund returned 1.70% (net) during the quarter outperforming the 0.62% returns of the Russell 2500 Index and -0.26% returns of the secondary benchmark the Russell 2500 Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Meridian Contrarian Fund emphasized stocks such as The Honest Company, Inc. (NASDAQ:HNST). Headquartered in Los Angeles, California, The Honest Company, Inc. (NASDAQ:HNST) manufactures and sells diapers and wipes, skin and personal care, and household and wellness products. The one-month return of The Honest Company, Inc. (NASDAQ:HNST) was -1.63%, and its shares gained 73.78% of their value over the last 52 weeks. On February 20, 2025, The Honest Company, Inc. (NASDAQ:HNST) stock closed at $6.03 per share with a market capitalization of $608.795 million.
Meridian Contrarian Fund stated the following regarding The Honest Company, Inc. (NASDAQ:HNST) in its Q4 2024 investor letter:
“The Honest Company, Inc. (NASDAQ:HNST) is a consumer products company focused on developing natural baby-care consumables, cosmetics, soaps, and other household supplies. The company went public in 2021, bolstered by pandemic-driven demand for its cleaning products. However, subsequent global supply chain challenges created headwinds for the smaller company, presenting a contrarian investment opportunity. We view the Honest brand as an authentic differentiator that has demonstrated growth despite operational challenges that previously impacted its earnings potential.
The company’s outperformance during the quarter and throughout 2024 was driven by sustained sales growth and notable improvements in gross margins, marking its first profitable year on an adjusted EBITDA basis. As Honest expands its product offerings in beauty categories aligned with consumer preferences for cleanly formulated skincare products—a segment we believe the company is well-positioned to succeed in—we remain optimistic about its long-term prospects. While we reduced our net shares held following the strong performance in the quarter, we maintain conviction in its growth potential.”
A close up of different packs of diapers and wipes, demonstrating the company’s main product range.
The Honest Company, Inc. (NASDAQ:HNST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held The Honest Company, Inc. (NASDAQ:HNST) at the end of the fourth quarter compared to 19 in the third quarter. In the third quarter of 2024, The Honest Company, Inc. (NASDAQ:HNST) achieved its highest quarterly revenue, with $99 million in sales, a 15% year-over-year increase. While we acknowledge the potential of The Honest Company, Inc. (NASDAQ:HNST) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article we discussed The Honest Company, Inc. (NASDAQ:HNST) and shared the list of stocks Jim Cramer recently shed light on. In addition, please check out our hedge fund investor letters Q4 2024 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.