Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund returned -6.16% (net) compared to a -4.78% return for the Russell 2500 Index. Furthermore, the fund underperformed its secondary benchmark, the Russell 2500 Value Index, which returned -3.66% 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 highlighted stocks like SSMART 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 November 29, 2023, SMART Global Holdings, Inc. (NASDAQ:SGH) stock closed at $16.80 per share. One-month return of SMART Global Holdings, Inc. (NASDAQ:SGH) was 23.35%, and its shares lost 2.21% of their value over the last 52 weeks. SMART Global Holdings, Inc. (NASDAQ:SGH) has a market capitalization of $872.23 million.
Meridian Contrarian Fund made the following comment about SMART Global Holdings, Inc. (NASDAQ:SGH) in its Q3 2023 investor letter:
“SMART Global Holdings, Inc. (NASDAQ:SGH) is a diversified technology company that designs and manufactures solutions in the computing, memory, and LED industries. We first invested in the company in 2020 on the heels of an earnings decline due to volatility in the memory business, order delays in its high-performance computing segment, and temporarily dilutive investments in new products. Individually, none of these developments are particularly unusual, but it is uncommon for all three to turn negative simultaneously. Our initial investment thesis was that the company’s new management team would smooth out such volatility while driving growth through effective capital allocation and organic investment. We also believed strong secular trends were in place for the memory business, given the increased importance of memory for computing speeds, and climbing demand for device memory overall, and the high-performance computing industry that is facilitating the integration of artificial intelligence (AI) and machine learning. SMART Global had been one of our strongest performers year-to-date as the company delivered impressive first half earnings, led by AI-related strength in its high-performance computing (HPC) business. It also sold a volatile Brazil division that we expect to lead to an expanded multiple. We attribute the stock’s weakness in the quarter to some market backlash against ‘AI hype.’ Although AI has only recently hit the mainstream, SMART Global has been involved in the space since it acquired Penguin Computing in 2018. Additionally, unlike most ‘AI hype’ stocks, the stock trades at a reasonable valuation of less than 11 times our calendar 2024 earnings per share estimates. We took the opportunity to increase our position in the company, though we are cognizant that the sale of the Brazil business could make earnings growth challenging for a few quarters and that the HPC business can be lumpy over the short term within the context of strong long-term demand.”
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SMART Global Holdings, Inc. (NASDAQ:SGH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held SMART Global Holdings, Inc. (NASDAQ:SGH) at the end of third quarter which was 27 in the previous quarter.
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 Q3 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.
