Meridian Funds, managed by ArrowMark Partners, released its first-quarter 2026 investor letter for “Meridian Hedged Equity Fund”. A copy of the letter can be downloaded here. The Fund invests in high-quality growth companies and mitigates risk by writing call options. Following the late-February strike on Iran, oil prices surged, leading to a risk-off sentiment, boosting energy sector performance. Large-cap technology stocks declined as investors rotated towards smaller companies and more defensive value investments. Market conditions are becoming challenging due to reduced expectations for a Federal Reserve rate cut and increasing geopolitical uncertainty. The Fund returned 0.08% (net) for the quarter, outperforming the S&P 500 Index, which fell 4.33%, and the CBOE S&P 500 BuyWrite Index, which declined 0.92%. At the end of the period, 43% of the portfolio was unhedged, while the remainder was invested in companies with covered call options. 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 Hedged Equity Fund highlighted Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is a multinational software company that develops and supports software, services, devices, and solutions, holding dominant positions in software, cloud infrastructure, generative AI, and gaming. On June 26, 2026, Microsoft Corporation (NASDAQ:MSFT) closed at $372.97 per share. One-month return of Microsoft Corporation (NASDAQ:MSFT) was -19.01%, and its shares lost 25.02% over the past 52 weeks. Microsoft Corporation (NASDAQ:MSFT) has a market capitalization of $2.77 trillion.
Meridian Hedged Equity Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q1 2026 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a global technology leader offering productivity software, cloud infrastructure (Azure), and enterprise AI tools. Our investment thesis centers on Microsoft’s structural advantage in the generative AI era, driven by Azure’s market share gains and the integration of AI across its extensive enterprise ecosystem. Accelerating adoption of Microsoft 365 Copilot and higher-tier enterprise subscriptions further expands the company’s addressable market and monetization potential. Microsoft delivered exceptionally strong business and financial results in the quarter. However, macro forces overwhelmed fundamentals as investors rotated away from large tech and the software sector came under pressure. Concerns about persistent AI compute-capacity constraints and the substantial capital expenditure required to scale its AI infrastructure also pressured the stock. We maintained our position throughout the quarter.”
Microsoft Corporation (NASDAQ:MSFT) ranks second on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 282 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the first quarter, compared to 312 in the previous quarter. In the third quarter of fiscal 2026, Microsoft Corporation (NASDAQ:MSFT) reported revenue of $82.9 billion, marking an increase of 18% and 15% in constant currency. While we acknowledge the risk and potential of Microsoft Corporation (NASDAQ:MSFT) 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 Microsoft Corporation (NASDAQ:MSFT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Microsoft Corporation (NASDAQ:MSFT) and shared the list of stocks that will make you rich over the next 3 years. 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.
