Meridian Funds, managed by ArrowMark Partners, released its “Meridian Hedged Equity Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. Risk assets continued to rise while market volatility remained low in the first quarter, perhaps indicating that investors are becoming somewhat complacent. In the quarter, the fund appreciated 5.46% (net), trailing its benchmark, the S&P 500 Index, which returned 10.56%. Also, the Fund slightly lagged behind its secondary benchmark, the CBOE S&P 500 Buy/Write Index’s 6.02% return. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Meridian Hedged Equity Fund highlighted stocks like Sally Beauty Holdings, Inc. (NYSE:SBH), in the first quarter 2024 investor letter. Sally Beauty Holdings, Inc. (NYSE:SBH) is a specialty retailer and distributor of professional beauty supplies. The one-month return of Sally Beauty Holdings, Inc. (NYSE:SBH) was -8.07%, and its shares lost 12.64% of their value over the last 52 weeks. On June 26, 2024, Sally Beauty Holdings, Inc. (NYSE:SBH) stock closed at $10.71 per share with a market capitalization of $1.109 billion.
Meridian Hedged Equity Fund stated the following regarding Sally Beauty Holdings, Inc. (NYSE:SBH) in its first quarter 2024 investor letter:
“Sally Beauty Holdings, Inc. (NYSE:SBH) is an international specialty retailer and distributor of professional beauty products, with a focus on hair color and hair care. The company has two segments: Sally Beauty Supply (“SBS”), which serves retail customers and salon professionals, and Beauty Systems Group (“BSG”), which serves professional stylists and salons. The company has faced several challenges in recent quarters, impacting both the top and bottom lines. The lower- to middle-income consumer who shops at SBS has felt pressure from inflation and has been more cautious with their spending. This has led to softer traffic at SBS as customers have been extending the time between hair treatments and buying fewer discretionary items. Unfavorable weather conditions in the early part of the second quarter of fiscal 2024 further pressured traffic. This is especially impactful to SBS, as it is the larger and higher[1]margin segment for the company. Despite near-term headwinds, Sally Beauty is implementing several initiatives that should benefit the company over time. The company has launched several programs, including the “Studio by Sally” store concept and the “Licensed Colorist on Demand” online platform, that should drive customer engagement and retention. Sally Beauty has also launched a new store concept called “Happy Beauty Co.,” a value-focused beauty store with all items priced under $10. The company is also focused on increasing the penetration of its owned brands across its segments, which carry higher margins than national brands. We expect these initiatives will aid in a return to positive comparable sales growth over time and help drive margin expansion. Given the uncertainty of the timing of these turnaround initiatives, we re-hedged our exposure to the stock during the period.”
A customer in a franchised store trying out hair color products.
Sally Beauty Holdings, Inc. (NYSE:SBH) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Sally Beauty Holdings, Inc. (NYSE:SBH) at the end of the first quarter which was 19 in the previous quarter. Sally Beauty Holdings, Inc.’s (NYSE:SBH) consolidated net sales for the quarter decreased by 1.1% to $908 million, while consolidated comparable sales decreased by 1.5%. While we acknowledge the potential of Sally Beauty Holdings, Inc. (NYSE:SBH) 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.
Sally Beauty Holdings, Inc. (NYSE:SBH) was among the top contributors to the Meridian Hedged Equity Fund in the previous quarter. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
