Meridian Funds, managed by ArrowMark Partners, released its “Meridian Hedged Equity Fund” fourth quarter 2023 investor letter. A copy of the same can be downloaded here. News of declining inflation and the potential for lower interest rates in 2024 fueled optimism in the final months of the year. Equities saw a broad rally, with small caps surging over 14% and large caps adding to yearly gains, resulting in a 12% return for the quarter. In the quarter, the fund appreciated 8.96% (net), trailing its benchmark, the S&P 500 Index, which returned 11.69%. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Meridian Hedged Equity Fund featured stocks like Sally Beauty Holdings, Inc. (NYSE:SBH) in the fourth quarter 2023 investor letter. Headquartered in Denton, Texas, Sally Beauty Holdings, Inc. (NYSE:SBH) is a specialty retailer and distributor of professional beauty supplies. On April 2, 2024, Sally Beauty Holdings, Inc. (NYSE:SBH) stock closed at $11.85 per share. One-month return of Sally Beauty Holdings, Inc. (NYSE:SBH) was -2.23%, and its shares lost 19.61% of their value over the last 52 weeks. Sally Beauty Holdings, Inc. (NYSE:SBH) has a market capitalization of $1.243 billion.
Meridian Hedged Equity Fund stated the following regarding Sally Beauty Holdings, Inc. (NYSE:SBH) in its fourth quarter 2023 investor letter:
“Sally Beauty Holdings, Inc. (NYSE:SBH) is a global distributor of retail and professional beauty products and is the largest in the U.S. by store count. Its operations are divided into two main segments: Sally Beauty Supply, catering to retail consumers, and Beauty Systems Group, serving the needs of salons and stylists. The recent increase in the company’s stock price can be attributed to growing evidence that management’s strategic initiatives are working. These measures are aimed at driving growth and ensuring profitability in the face of a challenging consumer market. While the company fell short of sales expectations in the quarter, it managed to maintain stronger-than-forecast margins. This performance indicates that the company’s pricing strategies and cost-control efforts are yielding positive results.
During the quarter, the company generated healthy free cash flow and committed to further stock repurchases, highlighting its commitment to returning value to shareholders. The stock’s currently low valuation relative to historical levels may suggest upside potential as management continues to execute its strategy. Despite external challenges, our investment thesis for owning Sally Beauty Holdings as a turnaround story remains intact. The position is held in a hedged structure, with covered call options sold to generate income premiums and offset potential weakness in the stock.”
A customer in a franchised store trying out hair color products.
Sally Beauty Holdings, Inc. (NYSE:SBH) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Sally Beauty Holdings, Inc. (NYSE:SBH) was held by 19 hedge fund portfolios, compared to 19 in the previous quarter, according to our database.
We discussed Sally Beauty Holdings, Inc. (NYSE:SBH) in another article and shared Meridian Hedged Equity 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.
