Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” second quarter 2024 investor letter. A copy of the letter can be downloaded here. Major index returns increased in the quarter due to strong earnings from large-cap technology companies, especially those connected to artificial intelligence. However, the market’s breadth revealed a different picture. The fund returned -5.03% (net) during the quarter underperforming the -4.27% return of the Russell 2500 Index and -4.31% 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.
Meridian Contrarian Fund highlighted stocks like Cerence Inc. (NASDAQ:CRNC) in its Q2 2024 investor letter. Cerence Inc. (NASDAQ:CRNC) offers AI-powered virtual assistants for mobility/transportation. The one-month return of Cerence Inc. (NASDAQ:CRNC) was 7.09%, and its shares lost 86.80% of their value over the last 52 weeks. On September 11, 2024, Cerence Inc. (NASDAQ:CRNC) stock closed at $2.87 per share with a market capitalization of $119.978 million.
Meridian Contrarian Fund stated the following regarding Cerence Inc. (NASDAQ:CRNC) in its Q2 2024 investor letter:
“Cerence Inc. (NASDAQ:CRNC) develops human-automotive interface software that provides drivers and passengers with applications ranging from infotainment to safety and, eventually, autonomous driving. We became shareholders when the company was spun off from a previous holding and the market assigned little value to the new company. The stock performed strongly for us initially and we were able to harvest significant profits. We maintained a position despite weak results over the past two years due to our belief that Cerence’s large market share, with software in over 50% of cars globally, should lead to significant growth opportunities. During the quarter the stock pulled back on missed earnings and reduced full-year and long-term forecasts. This continued poor fundamental performance convinced us that we might be wrong about the market opportunity, and we sold our entire position.”
A man with an AI powered virtual assistant, demonstrating the coexistence of the two.
Cerence Inc. (NASDAQ:CRNC) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held Cerence Inc. (NASDAQ:CRNC) at the end of the second quarter which was 11 in the previous quarter. Cerence Inc.’s (NASDAQ:CRNC) revenue for the fiscal third quarter was $70.5 million, up 14% over last year’s Q3 revenue. While we acknowledge the potential of Cerence Inc. (NASDAQ:CRNC) 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 Cerence Inc. (NASDAQ:CRNC) and shared Aristotle Small Cap Equity Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q2 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.
