Meridian Funds, managed by ArrowMark Partners, released its first-quarter 2026 investor letter for “Meridian Small Cap Growth Fund”. A copy of the letter is available to download here. The US equities market started 2026 with volatility driven by trade policy uncertainty and heightened geopolitical risks. Initial gains were attributed to confidence in domestic companies and the Federal Reserve easing. However, sentiment deteriorated following increased tariffs and military strikes by the U.S. and Israel against Iran. During the quarter, Meridian Small Cap Growth Fund returned -8.37% compared to the Russell 2000 Growth Index’s -2.82% return. The Fund’s relative underperformance was driven by industry allocation effects, while stock selection contributed positively. Despite the market environment, the fund prioritizes high-quality businesses characterized by durable competitive advantages, robust balance sheets, and a clear outlook for sustainable earnings growth. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Meridian Small Cap Growth Fund highlighted Zenas BioPharma, Inc. (NASDAQ:ZBIO). Zenas BioPharma, Inc. (NASDAQ:ZBIO) is a clinical-stage biopharmaceutical company specializing in developing transformative immunology-based therapies. On April 20, 2026, Zenas BioPharma, Inc. (NASDAQ:ZBIO) closed at $20.90 per share. One-month return of Zenas BioPharma, Inc. (NASDAQ:ZBIO) was -0.76%, and its shares gained 113.16% over the past 52 weeks. Zenas BioPharma, Inc. (NASDAQ:ZBIO) has a market capitalization of $1.30 billion.
Meridian Small Cap Growth Fund stated the following regarding Zenas BioPharma, Inc. (NASDAQ:ZBIO) in its Q1 2026 investor letter:
“Zenas BioPharma, Inc. (NASDAQ:ZBIO) is a clinical-stage biopharmaceutical company focused on developing treatments for autoimmune diseases, with its lead candidate targeting IgG4-related disease, a rare and underserved inflammatory condition. The company offers a differentiated approach with a potentially safer profile and more convenient at-home dosing compared to existing therapies. Shares declined after Phase 3 clinical data, while meeting statistical significance, showed a flare reduction rate that fell short of market expectations and compared unfavorably to a competing therapy. We continue to evaluate the opportunity but believe the company’s differentiated safety and dosing profile may still support a meaningful role in treatment.”
Zenas BioPharma, Inc. (NASDAQ:ZBIO) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 19 hedge fund portfolios held Zenas BioPharma, Inc. (NASDAQ:ZBIO) at the end of the fourth quarter, up from 13 in the previous quarter. While we acknowledge the risk and potential of Zenas BioPharma, Inc. (NASDAQ:ZBIO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Zenas BioPharma, Inc. (NASDAQ:ZBIO) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Zenas BioPharma, Inc. (NASDAQ:ZBIO) and shared Meridian Funds’ views on the company in Q4 2025. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
