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Meridian Fund’s Third Quarter Update: Great Reductions in Consumer Goods and Services Sectors

November 06, 2012 | About:
The late Richard F. Aster Jr.’s Meridian Fund Inc. has reported a total of 67 transactions in the three months that represent the third quarter, 15 of them reductions to current shareholdings and 25 of them complete sells of entire shareholdings with companies.

The consumer goods and services sectors accounted for the majority of Meridian’s reductions and sells, with the technology sector in second place.

Meridian’s third quarter portfolio updates also included 19 new buys and shareholding additions with 8 companies.



With an equity value of $2.79 billion, Meridian Fund Inc. owns 147 mid- to large-cap stocks in its portfolio, and is parent to three funds: Meridian Equity Income Fund, Meridian Growth Fund and Meridian Value Fund.

Industrials, technology, consumer services, financials and consumer goods make up the top five sectors represented in the fund’s portfolio.

Meridian listed its primary investment beliefs on its website which included focusing on earnings growth as the determinant of stock prices, as well as valuation and investing in stocks long-term, which will “outperform bonds and other liquid investments.”

Prior to Richard Aster Jr.’s death in February, Aster, who led portfolio management in Meridian’s investment advising company, Aster Investment Management Co. Inc., also led all the funds under Meridian Fund Inc. Currently, the following people have assumed management responsibilities of the three funds: Larry Cordisco, James England, James O’Connor and William Tao, according to a prospectus filed with the SEC Nov. 1.

The following companies are some of Meridian’s third quarter sells that experienced high changes from their average price for the quarter: Royal Caribbean Cruises Ltd. (RCL), Carmax Inc. (KMX) and Blackbaud, Inc. (BLKB).

To view all of Meridian’s 67 transactions in the third quarter, visit its GuruFocus Stock Picks.

Royal Caribbean Cruises Ltd. (RCL)

Out of all of Meridian’s third quarter portfolio updates, Royal Caribbean Cruises (RCL) experienced the highest change from its average price for the quarter, at 29 percent.

Its price per share has ranged from $23.61 to as high as $31.26. It is currently selling at $35.02.

Meridian Funds reduced its shareholding with the company by 51.84 percent in the third quarter, and now has a current shareholding of 925,050 shares.

As a global cruise vacation company that operates 40 cruise ships under five different cruise lines, Royal Caribbean has a market cap of $7.32 billion, and has a business predictability rank of 3 out 5 stars by GuruFocus.

Under four Severe Warning signs, its data also reveals a declining gross margin, a declining operating margin and a history of long-term debt.



Besides Meridian Fund, the following Gurus have sold out all their shares of Royal Caribbean as of the second quarter: Steven Cohen, Louis Moore Bacon and Jim Simons.

CarMax Inc. (KMX)

Online car buying company, CarMax Inc. (KMX) experienced a 20 percent change from its average price in the third quarter. Meridian reduced 46.46 percent of its shares with the company, only its third reduction in its CarMax holding history, which started in the first quarter of 2009.

Currently trading at $35.40 per share (close to its 10-year high), almost 3 percent up for today, CarMax has a market cap of $7.67 billion; it also has a P/E ratio (ttm) of 19.06, a P/B ratio of 2.7 and a P/S ratio of 0.8.

1352220922316.pngKMX data by GuruFocus.com

Meridian currently holds 986,395 shares of CarMax after the reduction, which only impacted his portfolio negatively by 0.74 percent.

Blackbaud Inc. (BLKB)

Meridian Inc. reduced its shares of Blackbaud Inc. (BLKB) by 82.92 percent, after it changed from its average price by 15 percent in the third quarter.

Serving the nonprofit and education sectors, Blackbaud Inc. provides cloud-based and on-premise software solutions to meet the needs of its 27,000 customers in more than 60 countries. Its services include aiding in initiatives that deal with fundraising, eMarketing, social media, advocacy, and financial management, to name a few.

Blackbaud stock is up almost 2 percent today, trading at $22.40. It has a market cap of 1.07 billion, a P/E (ttm)ratio of 58, a P/B ratio of 6.9 and a P/S ratio of 2.9.

Despite its four Severe Warning signs that indicate a bankruptcy possibility and declining efficiency, Blackbaud also appears with five Good Signs, with high dividend yields, a price close to a three-year low as well as P/E and P/B ratios appearing low.



Meridian currently holds 242,400 shares of Blackbaud after its reduction. Meridian has reduced the company in the last three consecutive quarters.

View the rest of Meridian Fund's portfolio details here. Also view its high yield stocks, top growth companies and undervalued stocks.

About the author:

Dianne Tordillo
Dianne Tordillo is staff writer for GuruFocus.com. She reports on a variety of financial news, primarily dealing with investor portfolios and stock trades. Her articles also highlight insider trades, as well as the many useful features of GuruFocus.

Visit Dianne Tordillo's Website


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