Overview
- Meridian Funds published its Q1 2026 investor letters on Monday, reporting that the Meridian Hedged Equity Fund returned 0.08% net while the Meridian Contrarian Fund returned 1.10%, results that contrasted with a 4.33% drop in the S&P 500 and mixed gains in small‑cap benchmarks.
- The firm said a late‑February strike on Iran pushed oil prices higher and prompted investors to move money into energy and defense‑linked names, helping explain the quarter’s shift away from large‑cap technology.
- Meridian Hedged Equity kept its PayPal position despite saying the company has lost share to rivals like Apple Pay, faces margin pressure from its Braintree unit, showed a sharp slowdown in branded checkout growth, and that new management plans heavy reinvestment to stabilize results.
- Meridian Contrarian highlighted three winners that rallied on company catalysts — California Resources for carbon‑neutral energy and AI data‑center demand, NLIGHT for defense laser applications, and Adeia after licensing wins including AMD — and said it trimmed each position on strength but remained invested.
- The letters emphasize active risk management through covered‑call overlays and position trims, and warn that lingering Fed policy uncertainty and unclear timing of AI capex could prolong sector rotation and keep pressure on large tech names.