Meridian Funds

Meridian Funds

Last Update: 08-31-2013

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 Heritage-Crystal Clean

    Heritage-Crystal Clean, Inc. (NASDAQ:HCCI) has been a solid, long-term performer, but pulled back during the period in response to declining oil prices. One of the reasons we were originally attracted to this environmental services company is the recurring revenue stream generated by its parts cleaning business. However, Heritage-Crystal Clean also provides a used oil collection service and operates an oil re-refinery. The company is successfully lowering input costs in this business, recently transitioning from paying customers to collect and dispose of used oil to charging for this service. Heritage then re-processes the used oil it collects and sells it as new motor oil. We believe this segment of the business shows considerable promise, and have been adding to the position.


  • Meridian Funds Comments on Roadrunner Transportation Systems

    Roadrunner Transportation Systems, Inc. (NYSE:RRTS), a leading transportation and logistics service provider, declined along with other transportation service providers. Weak freight markets, a more competitive pricing environment, and an increase in accidents worked against Roadrunner, causing it to miss third-quarter earnings expectations. The company also took a one-time charge after discontinuing a lease-guarantee program designed to attract owner-operators. We believe Roadrunner’s position as the low-cost provider in this space will enable it to successfully weather the competitive pricing environment, which we expect will be short-lived. In addition, the company is gaining market share and enjoying double-digit returns on acquisitions. We opted to hold onto this stock while closely monitoring fundamentals.


  • Meridian Funds Comments on Pacific Biosciences of California Inc.

    Pacific Biosciences of California Inc. (NASDAQ:PACB) is a leader in the field of next-generation gene sequencing technology. In October, the company unveiled the Sequel™ System, a gene-sequencing platform that is smaller and less expensive than the Pacific Bioscience’s former gene sequencer. This groundbreaking technology enables longer and more accurate reads of genomes, and is the result of collaboration with Roche, a health care company with interests in human in vitro diagnostics. Late in the period, Pacific Biosciences received a $20 million milestone payment from Roche for completing the project. We believe this new platform will enable the company to penetrate a larger portion of the broader sequencing market.


  • Meridian Funds Comments on Solera Holdings Inc.

    Solera Holdings, Inc. (NYSE:SLH) is a company we’ve followed for several years but were unable to purchase due to the fact that it remained just above the portfolio’s market-capitalization range. However, in July the company’s market cap declined, making it a viable investment for the portfolio. As a provider of risk and asset management software and services to the global automotive industry, Solera is a stable business that is both predictable and defensive in nature. The majority of the company’s revenues are recurring, and it has a strong competitive position, particularly outside of the U.S. where it generates over half of its revenue. In August, Solera’s management announced the sale of the company to private equity firm Vista Equity Partners for $6.5 billion, causing the stock to appreciate. We viewed the increase in Solera’s share price as an opportunity to take profits and trimmed our position.


  • Meridian Funds Comments on SolarWinds Inc.

    SolarWinds, Inc. (NYSE:SWI) accepted a $4.5 billion offer to be acquired by two private equity firms, turning it into a homerun for investors. In October, the developer of IT infrastructure management software agreed to be purchased at nearly a 20% premium by Silver Lake Partners and Thoma Bravo. We initiated a position in SolarWinds in 2013 based on our belief that the company would benefit from an increasingly large market opportunity created by a pervasiveness of performance-driven IT infrastructures. We opportunistically added to the position when the stock pulled back and were rewarded by the takeout.


  • Meridian Funds Comments on Royal Gold Inc.

    Royal Gold, Inc. (NASDAQ:RGLD) is a precious metals company with royalty claims on gold, silver, copper, lead, and zinc at mines in over 20 countries. While gold performed better than other commodities during the period, the precious metal declined as U.S. monetary policy tightened and the dollar appreciated. Another setback for the company was the deferral of gold from a mine in Chile operated by Barrick Gold, which temporarily stopped construction at the mine. However, we believe Royal Gold has an exceptional business model and we view our investment in the company as a great way to get exposure to gold. The company essentially pays miners upfront for the right to buy their metals later at reduced prices. It has no operational risk because it owns no mines, is a beneficiary of ounces growth, has pricing power, and typically earns an 8% return on a flat price. We have decided to be patient with Royal Gold and maintained a position in the stock.


  • Meridian Funds Comments on Exact Sciences Corp

    Exact Sciences Corp. (NASDAQ:EXAC) declined after an independent panel of health care experts excluded the company’s colon cancer-screening test from a list of recommended tests in the U.S. Instead, the panel defined the product as “alternative testing that may be useful in select clinical circumstances.” Marketed as Cologuard, the product is a non-invasive, FDA-approved colorectal cancer-screening test covered by Medicare. It has proven effective at detecting early-stage colon cancer as well as precancerous lesions. When detected early, colon cancer is highly curable. However, Cologuard’s exclusion from the panel’s list of recommended tests may make it more difficult to win favorable reimbursement from private insurers. We consequently liquidated our position in Exact Sciences and used proceeds from the sale to invest in other, more attractive investment opportunities.


  • Meridian Funds Comments on California Resources Corp

    California Resources Corp. (NYSE:CRC) is focused solely on oil and natural gas exploration and drilling in California. Our investment in this stock was based on the expectation that U.S. production would soon taper off, resulting in higher domestic oil prices. However, production continued to increase for much longer than we anticipated, forcing management to make production cutbacks, slash capital spending plans, and reduce the number of wells it plans to operate. Another negative for the company was its elevated debt load, which tends to fuel greater volatility in the stock when oil prices fall. We continue to believe California Resources Group is positioned for a rebound when U.S. oil production slows and therefore maintained a position in the stock.

    From the Meridian Equity Income Fund fourth quarter commentary.


  • Meridian Funds Comments on Inc., Inc. (NASDAQ:AMZN) continues to move the needle on many fronts, including cloud computing. Amazon Web Services (AWS), which rents computing power and storage for corporate customers, is the leader in this space and continues to strengthen its competitive advantage through major feature releases, more data centers, and price cuts for several of its services. Although AWS recently announced annual revenue growth of approximately 60% and a profit margin of greater than 50%, we believe this segment of the business has much more room to grow. Another positive development for the stock was a significant shift in consumer buying trends during the holiday season as more people chose to do their shopping in the e-commerce marketplace rather than in bricks-and-mortar stores. This shift helped Amazon exceed earning expectations during the third quarter.

    From the Meridian Equity Income Fund fourth quarter commentary.


  • Meridian Funds Comments on Clean Harbors Inc.

    Clean Harbors, Inc. (NYSE:CLH) is a provider of environmental, energy, and industrial services, including hazardous waste disposal for companies. The rapid deterioration of oil prices during the period caused Clean Harbors’ re-refining business to suffer. However, we believe the company’s hazardous waste disposal business is its greatest asset. It is extremely difficult for companies to meet Environmental Protection Agency (EPA) requirements and to obtain permitting for new hazardous waste incinerators, giving Clean Harbors a competitive advantage. This business has benefitted from a steady increase in the types of waste classified by the EPA as hazardous. Given the industry’s limited capacity and Clean Harbors’ dominant position in this space, the company has been able to consistently raise prices. We believe investors are too focused on the short-term movement of crude oil prices and not focused enough on the long-term growth potential of this company. We consequently increased our position in the stock.

    From Meridian Growth Fund Semi-Annual Letter to Shareholders 2016.


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