Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” first quarter 2024 investor letter. A copy of the same can be downloaded here. Strong economic signals and a positive inflation report lifted the market rally during the first quarter. The fund returned 6.25% during the quarter underperforming the 6.92% return of the Russell 2500 Index. However, the fund outperformed the 6.07% returns of the secondary benchmark the Russell 2500 Value Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Meridian Contrarian Fund highlighted stocks like SMART Global Holdings, Inc. (NASDAQ:SGH), in the first quarter 2024 investor letter. SMART Global Holdings, Inc. (NASDAQ:SGH) is a memory-focused company, that designs and develops enterprise solutions. The one-month return of SMART Global Holdings, Inc. (NASDAQ:SGH) was 10.18%, and its shares lost 12.66% of their value over the last 52 weeks. On June 21, 2024, SMART Global Holdings, Inc. (NASDAQ:SGH) stock closed at $22.63 per share with a market capitalization of $1.183 billion.
Meridian Contrarian Fund stated the following regarding SMART Global Holdings, Inc. (NASDAQ:SGH) in its first quarter 2024 investor letter:
“SMART Global Holdings, Inc. (NASDAQ:SGH) is a diversified technology company with leading market positions in memory, LEDs, high-performance computing (HPC), and the Internet of Things (IoT). Our interest was piqued when the company hit a rough patch in 2019-early 2020 as several factors led to an earnings decline. Volatility in its memory business caused by weakness in Brazil, new product investments the company had made ahead of revenue, and order delays in its HPC business all converged. While none of these developments are particularly unusual, it is uncommon for all three to turn negative at the same time. Our thesis was that the company’s impressive new management team could not only smooth out some of the volatility in the business but also drive growth through superior capital allocation and organic investment. With the stock trading at less than 8x earnings at the time of our investment (Q3 2020), we believed the risk/reward was excellent. The stock was strong in the quarter due to positive earnings results and guidance. The memory business appears to be in a cyclical upturn within a strong long-term secular growth trend driven by increased memory content in everything from phones to data center equipment to cars. Smart Global remains a leader in HPC implementation for AI, a market that remains strong, and there is anticipation that the company’s efforts to enhance its go-to-market strategy should gain traction. We believe the long-term risk/reward is still strong and maintain a large position in the stock, though we reduced our position during the quarter as part of our regular risk management process.”
An array of LED lights illuminating a video wall, showcasing the company’s capabilities.
SMART Global Holdings, Inc. (NASDAQ:SGH) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held SMART Global Holdings, Inc. (NASDAQ:SGH) at the end of the first quarter which was 20 in the previous quarter. In the recent quarter, SMART Global Holdings, Inc. (NASDAQ:SGH) generated revenue of $285 million, which was in line with the midpoint of its guidance. While we acknowledge the potential of SMART Global Holdings, Inc. (NASDAQ:SGH) 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.
We discussed SMART Global Holdings, Inc. (NASDAQ:SGH) in another article and shared ClearBridge Small Cap Value Strategy’s views on the company. SMART Global Holdings, Inc. (NASDAQ:SGH) was one of the detractors of the Meridian Contrarian 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.
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Disclosure: None. This article is originally published at Insider Monkey.
