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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Meridian Hedged Equity returned 4.50% net in Q2 2026, trailing the S&P 500's 15.20% as covered call hedges limited upside in a powerful rebound driven by Middle East de-escalation and AI-fueled semiconductor strength. Top contributors MGM Resorts, Global Foundries, and ACV Auctions delivered strong operational results and capital allocation announcements."
The Meridian Hedged Equity Fund returned 4.50% net during Q2 2026, trailing the S&P 500's 15.20% gain as its hedged equity strategy limited participation in a powerful market rebound driven by Middle East de-escalation and AI-fueled semiconductor strength. The Fund maintains approximately 37% of its portfolio unhedged for long-term capital growth, with the remainder employing covered calls for income generation and risk mitigation. Top contributors included MGM Resorts, which benefited from record Las Vegas Strip results and a 15% acquisition premium from a non-binding takeover proposal; Global Foundries, which delivered 300 basis points of margin expansion and announced its first dividend; and ACV Auctions, which exceeded guidance and launched AI-powered dealer solutions. Detractors included Intercontinental Exchange, pressured by competitive threats to perpetual futures, and Chevron, weighed down by M&A capital requirements despite operational recovery. Looking ahead, the manager sees a more constructive backdrop but narrower margin for error, with inflation above target, potential Fed hikes replacing anticipated cuts, and elevated valuations leaving markets dependent on continued earnings delivery from technology companies underwriting an unproven AI capital spending cycle. The manager anticipates volatility and maintains focus on high-quality businesses with durable competitive advantages, strong balance sheets, and attractive valuations.
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