Meridian Funds

Meridian Funds

Last Update: 2013-08-31

Number of Stocks: 149
Number of New Stocks: 15

Total Value: $2,681 Mil
Q/Q Turnover: 13%

Countries: USA
Details: Top Buys | Top Sales | Top Holdings  Embed:

Meridian Funds Watch

  • Meridian Funds Comments on Del Frisco's Restaurant Group Inc

    Del Frisco’s Restaurant Group (DFRG) is a fine dining company that operates 45 steakhouses across three brands. We initiated our position when earnings were pressured by underperformance in the Sullivan’s Steakhouse brand and the investment in a new growth brand, Del Frisco’s Grille. We like the fact that the company overall has outperformed the overall restaurant sector the past few years. The company underperformed in the quarter due to delays in new store openings and some location-specific issues that hurt revenue growth. We continue to believe that Del Frisco’s offers an appealing product with high unit growth potential and have added to our position on the recent price weakness.

    From Meridian Funds (Trades, Portfolio)’ Meridian Contrarian Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on Endologix Inc

    Endologix (ELGX) is a medical device company with products that treat aortic abdominal aneurisms (AAA). Recently the company experienced a decline in sales growth after the conclusion of a clinical trial rollout. We believed the revenue issue was temporary and were very excited about a new product called Nellix that has the potential to more than double Endologix’s market share in AAA procedures. During the quarter, share performance disappointed after the company disclosed that sales would again miss expectations, this time due to an intensifying competitive environment. While management outlined an aggressive response, including product enhancements intended to further improve upon the lowest complication rate in the AAA industry, we have reduced our position until we can gain greater clarity on how effective these efforts will be in the market.

    From Meridian Funds (Trades, Portfolio)’ Meridian Contrarian Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on Halcon Resources Corp

    Halcon Resources (HK) is an independent, U.S.-based oil and gas exploration and production company. At the time of our investment, the stock was out of favor due to a combination of high levels of investment spending and poor drilling results at select wells. This created an opportunity to invest in the management team, which has an excellent record of finding and developing energy assets, and their ability to deliver improved exploration results and production growth. Halcon’s stock underperformed meaningfully in the quarter, reversing strong performance in the first half of 2014. As a development-stage company with a leveraged balance sheet, the company’s stock demonstrated greater volatility than the sector as a whole and declined significantly more than the price of oil. Despite short-term volatility potential, we believe the company has the ability grow reserves and production and could potentially be an acquisition target over the long term.

    From Meridian Funds (Trades, Portfolio)’ Meridian Contrarian Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on Icon PLC

    ICON (ICLR) manages clinical trials for the biotech, pharmaceutical and medical device industries. Our investment in the company materialized when earnings were pressured by an industry slowdown in clinical trials at the same time that ICON was investing in its own capacity expansion. We viewed the slowdown in demand as temporary, caused by the elimination of many duplicative drug development programs. In addition, we thought ICON’s investments in technology positioned the company to gain market share in a growing industry as pharmaceutical customers increasingly outsourced clinical trial work. Strong stock performance in the quarter was driven by revenue and margins coming in above street estimates and a positive management outlook. We continue to hold shares in ICON based on its positioning as a technology leader in the clinical trial industry and the potential to further expand operating margins

    From Meridian Funds (Trades, Portfolio)’ Meridian Contrarian Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on Chiquita Brands International Inc

    Chiquita Brands (CQB) is a global leader in bananas and the U.S. leader in packaged salads. Our original investment came after the company’s earnings declined due to market share losses in salads, tough European markets and foreign exchange losses. We believed new management had a strong history and a compelling plan to improve consistency of results and capital allocation. Chiquita stock performed well in the quarter due to a buyout offer from a Brazilian conglomerate in an attempt to trump Chiquita’s existing plans to merge with a European partner. We took advantage of the strength in the stock to reduce our position and may continue to do so.

    From Meridian Funds (Trades, Portfolio)’ Meridian Contrarian Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on ServiceMaster Global Holdings Inc

    Servicemaster Global Holdings (SERV) is a leading provider of termite and pest control services, home warranties, and other residential services. We identified the company after marketing and service missteps at its lawn care division, which was spun off earlier this year. We invested in Servicemaster because of its dominant positions in fragmented markets. The stock outperformed during the quarter due to better than expected revenue and profit growth despite a weather- weakened termite season. Upside came from pricing, market share gains and cost efficiencies. We added to our position due to the encouraging quarterly results and an outlook for steady, low double digit earnings growth achieved through continued market share gains, operating margin expansion and debt reduction.

    From Meridian Funds (Trades, Portfolio)’ Meridian Contrarian Fund 3Q 2014 Commentary.  


  • Meridian Contrarian Fund 3Q 2014 Commentary

    FUND SUMMARY


    During the third quarter of 2014, the Meridian Contrarian Fund returned -4.59%, which compares to a return of -5.35% for its benchmark, the Russell 2500 Index.

      


  • Meridian Funds Comments on Clean Harbors Inc

    Clean Harbors (CLH) underperformed during the quarter due to concerns around falling lube oil prices, exposure to the Canadian energy sector, and struggles by one of its publicly traded competitors. We believe the declines in lube oil prices are a normal seasonal occurrence that may reverse in future periods. We also believe that Clean Harbors is well positioned to execute through a period of weak demand from its energy customers and that the struggles felt by its competitors are unlikely to impact Clean Harbors. We have maintained our position through this period of volatility and continue to believe that many of the company’s assets are irreplaceable.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on CHC Group Ltd

    CHC Group (HELI) has suffered along with the entire offshore oil services group. The company’s high financial leverage and recently announced plan to issue convertible preferred debt impacted the share price negatively in the quarter. We trimmed the position as we have become less comfortable with the company’s absolute leverage and the dilutive nature of the capital raise.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on RigNet Inc

    RigNet (RNET) underperformed due to fears around excess supply of offshore drilling rigs. We believe the overall business is misunderstood and the impact of excess drilling rig supply will have a very small impact on RigNet’s growth prospects. The 20% organic growth rate reported by the company in Q2 is not fully appreciated by the market. As we have demonstrated with some of this quarter’s largest contributors, we are patient investors and believe the risk/reward profile from this price is very favorable. We added to our position in RigNet throughout the quarter.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on Carter's Inc

    Carter’s (CRI) is a leading retailer of infant and toddler apparel. Carters’ returned 12.72% on the back of a strong Q2 earnings report, which saw bottom-line profits increase 33%. We continue to believe that the company can grow revenues at attractive rates given its low penetration in e-commerce and international markets. Due to the company’s dominant position and strategic initiatives, we believe the runway for growth remains favorable.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on Dresser-Rand Group Inc

    Dresser-Rand (DRC) was the target of an acquisition by Siemens. Dresser-Rand provides highly engineered, mission-critical equipment to the energy sector. Despite recent underperformance from a new unit business, our patience was rewarded as Siemens saw the value in the recurring aftermarket profit stream and new product innovations. Given limited upside from current levels, we will likely use Dresser-Rand as a source of cash for better ideas until the deal closes in 2015.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund 3Q 2014 Commentary.  


  • Meridian Funds Comments on Cimpress NV

    VistaPrint (CMPR) offers online marketing products and services to small businesses. The company was a large negative contributor to performance earlier this year, when its brand repositioning efforts were felt most severely. We added to the position during this weakness, given we felt the revenue headwinds were temporary, and management’s actions potentially improved the long-term characteristics of the business. Our patience paid off during the third quarter, as earnings came in more than 40% above consensus, which drove the stock higher. We trimmed our position in VistaPrint as the stock rose significantly from the low point in July to quarter end.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund 3Q 2014 Commentary.  


  • Meridian Growth Fund 3Q 2014 Commentary

    Overall, small and mid cap stocks were challenged this quarter, with these stocks exhibiting increased volatility. We were able to take advantage of this volatility, which helped the Meridian Growth Fund (the “Fund”) approach our target of 100% upside participation in market rallies and only 80% downside participation during pullbacks. We believe this ability to protect capital in market pullbacks, yet perform in-line during up markets, is the best way to compound investor capital over time.


    From the high on March 4 in the Russell 2500 Growth Index (the “Index”) until the bottom on April 11, the Fund captured only 70% of the market’s pullback. We were able to selectively buy stocks during this period that were previously too expensive to own. From the Russell 2500 Growth Index’s low on April 11 until the September 2 peak, the Fund captured 103% of the upside move.

      


  • Meridian Funds Comments on Wolverine World Wide

    Wolverine World Wide (WWW) manufactures and markets branded footwear globally. The stock declined during the quarter as investors wait for a turnaround in one of their key brands, Sperry. We continue to be attracted to the company’s strong portfolio of brands, the long- term international growth opportunity and the strong management team. We trimmed the stock during the quarter; however, we still maintain a large position in the stock.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund Second Quarter 2014 Commentary.  


  • Meridian Funds Comments on The Advisory Board Co

    The Advisory Board Company (ABCO) provides best practice research and analysis to the health care industry. The stock declined during the quarter when the company announced earnings that included higher than expected expense growth. We believe these investments are good uses of capital that will enhance the business model and long-term growth profile of the company. We continue to see a strong need for the company’s services and held our position during the quarter.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund Second Quarter 2014 Commentary.  


  • Meridian Funds Comments on Clean Harbors

    Clean Harbors (CLH) provides a variety of environmental remediation and industrial waste management services. After being a laggard in the first quarter, during which time we also added to the position, the stock reacted strongly to both stabilizing business trends and the announcement that an activist investor was involved in the security. We remain attracted to the company’s large barriers to entry and pricing power in their core businesses and the recovery that we believe is on track in some of the company’s more cyclical businesses. We took advantage of the strength in the quarter to trim some of the position.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund Second Quarter 2014 Commentary.  


  • Meridian Funds Comments on Prestige Brands

    Prestige Brands (PBH) is the largest independent provider of over-the-counter products in North America. Examples of their brands include Chloraseptic, Dramamine, PediaCare and Efferdent, to name a few. We added to the position during the first quarter when the stock was one of the largest detractors, selling off for short-term reasons. The company experienced a decline in items stocked at one of the company’s largest customers, but we believe this is a temporary situation and our long- term thesis remains unchanged. This proved timely as the company demonstrated stabilized results during the second quarter and announced an acquisition, which drove the stock higher. Prestige Brands has an asset-light business model that focuses exclusively on the marketing and distribution of these brands, which results in a growing, scalable and high-return business model. We continue to hold the position.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund Second Quarter 2014 Commentary.  


  • Meridian Funds Comments on Polypore International Inc

    Polypore International (PPO) develops, manufactures and markets specialized membranes used in separation and filtration processes. The stock rallied strongly during the second quarter as it signed a new agreement with a customer that includes possible access to one of the world’s fastest growing electronic vehicle brands. We believe the company has substantial earnings growth potential driven by increases in capacity utilization of their lithium ion separator manufacturing facilities as electronic vehicles increase their share of total automobile production. We took advantage of the strong stock move to trim some of the position during the quarter.

    From Meridian Funds (Trades, Portfolio)’ Meridian Growth Fund Second Quarter 2014 Commentary.  


  • Meridian Growth Fund Second Quarter 2014 Commentary

    We are pleased with the Meridian Growth Fund’s (the “Fund”) outperformance during the quarter, which was driven by our discipline of using fundamental research to identify high-quality growth businesses with predictable and recurring revenues, high returns on capital and attractive risk-reward profiles. We then look to build a durable fund based on these ideas that seeks to manage downside risk in tough, turbulent markets and keeps up with the broader market in bull market environments.


    We believe the period from the market’s peak early in March is a good demonstration of this. From the market’s peak in early March, the fund captured just 71% of the market’s downside move, falling 6.5%* as compared to 9.2% for the Russell 2500 Growth to the April low. From that low point the fund was then able to capture 90% of the upside going into the end of the quarter, rising 8.0%* versus the index’s gain of 9.0%. We believe this focus on going down less in down markets can result in long-term outperformance due to the power of compounding. By maintaining discipline and a long-term focus, we welcome increased volatility in the market and believe these short-term gyrations can create opportunities to invest capital.

      


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