Meridian Funds, managed by ArrowMark Partners, released its “Meridian Contrarian Fund” fourth-quarter 2025 investor letter. A copy of the same can be downloaded here. U.S. equity markets experienced a quarter supported by optimism around potential monetary easing and caution related to economic growth and valuations. Early gains were driven by strong AI-related earnings and the US Federal Reserve’s rate cut in October, which improved expectations for financial conditions. However, market sentiment cooled later in the quarter. Despite this moderation, the quarter contributed positively to robust annual results. Value stocks outperformed growth, returning 3.3% versus 1.2% for the quarter. Against this backdrop, the Fund delivered a return of 2.18% (net) in the quarter, underperforming the Russell 2500 Index’s 2.22% return and the secondary benchmark, the Russell 2500 Value Index’ 3.15% return. As the market heads into 2026, the firm is closely watching factors that may affect market returns, including monetary policy changes with a new Fed Chair and the sustainability of AI investments due to high valuations among hyperscalers. In the unpredictable backdrop, the firm concentrates on its systematic and consistent investment approach, which aims to pinpoint opportunities in companies that can achieve strong performance regardless of macroeconomic factors. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Meridian Contrarian Fund highlighted The Honest Company, Inc. (NASDAQ:HNST) as one of its leading relative detractors. Headquartered in Los Angeles, California, The Honest Company, Inc. (NASDAQ:HNST) is a consumer products company that manufactures and sells baby-care products, skin and personal care, and household and wellness products. The one-month return of The Honest Company, Inc. (NASDAQ:HNST) was -3.10%, and its shares lost 60.19% of their value over the last 52 weeks. On January 27, 2026, The Honest Company, Inc. (NASDAQ:HNST) stock closed at $2.50 per share, with a market capitalization of $279.477 million.
Meridian Contrarian Fund stated the following regarding The Honest Company, Inc. (NASDAQ:HNST) in its fourth quarter 2025 investor letter:
“The Honest Company, Inc. (NASDAQ:HNST) is a consumer products company specializing in natural baby-care consumables, beauty, and other household supplies. We initially invested in Honest as a contrarian investment opportunity following post pandemic supply chain disruptions, seeing value in the brand’s authenticity and in its history of growth despite operational challenges. The stock declined during the period after mixed results, with earnings exceeding expectations, but sales falling short. Investors also reacted negatively to the company’s decision to exit the Canadian market and its baby apparel business. We view these actions as strategically positive, as they sharpen management’s focus on potentially more profitable growth. We reduced the position to realize tax losses following the reset but continue to hold a stake, as we believe the market underappreciates Honest’s focus and long term growth potential.”
The Honest Company, Inc. (NASDAQ:HNST) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held The Honest Company, Inc. (NASDAQ:HNST) at the end of the third quarter, the same as in the previous quarter. The Honest Company, Inc. (NASDAQ:HNST) reported revenue of $93 million, down 7% year-over-year. While we acknowledge the risk and potential of The Honest Company, Inc. (NASDAQ:HNST) 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 The Honest Company, Inc. (NASDAQ:HNST) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered The Honest Company, Inc. (NASDAQ:HNST) and shared Meridian Contrarian Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q4 2025 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.
