Meridian Funds, managed by ArrowMark Partners, released its second-quarter 2026 investor letter for “Meridian Small Cap Growth Fund”. A copy of the letter can be downloaded here. The U.S. market saw a strong rally in the second quarter, fueled by easing geopolitical tensions, falling oil prices, and robust corporate earnings. Growth stocks, especially in technology and healthcare, led the charge, supported by AI-related investments from hyperscalers that added momentum. Meanwhile, traditional safe havens like gold declined. In this context, the Meridian Small Cap Growth Fund (the “Fund”) achieved a 21.54% return for the quarter ending June 30, 2026. This lagged behind its benchmark, the Russell 2000 Growth Index, which gained 25.71%, due to factor and style headwinds—as high-beta and momentum stocks soared, its lower-volatility, quality-focused holdings underperformed. The Fund continues to prioritize quality businesses, risk management, and downside protection, with portfolio adjustments driven by strategic allocation. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Meridian Small Cap Growth Fund highlighted Veracyte, Inc. (NASDAQ:VCYT). Veracyte, Inc. (NASDAQ:VCYT), a global diagnostic company, contributed to the fund’s performance during the quarter. On July 29, 2026, Veracyte, Inc. (NASDAQ:VCYT) closed at $55.71 per share, reflecting a market capitalization of $4.44 billion. Veracyte, Inc. (NASDAQ:VCYT) posted a one-month return of -2.40%, while its shares gained 136.96% over the past 52 weeks.
Meridian Small Cap Growth Fund stated the following regarding Veracyte, Inc. (NASDAQ:VCYT) in its Q2 2026 investor update:
“Veracyte, Inc. (NASDAQ:VCYT) is a profitable genomic diagnostics company anchored by its Decipher prostate cancer test and Afirma thyroid test, supported by a deep base of proprietary clinical evidence. We own it for its durable, volume-driven testing revenue, expanding menu, and a defensible competitive moat built over more than a decade of evidence generation. Shares advanced sharply during the quarter after a strong earnings beat and raised full-year guidance, underpinned by continued double-digit volume growth in Decipher and improved Afirma performance following a workflow upgrade that reduced its no-result rate. Two upcoming launches—Prosigna in breast cancer and the TrueMRD platform in bladder cancer—together with a steady cadence of clinical data, reinforced confidence in a multi-year growth runway.”
Veracyte, Inc. (NASDAQ:VCYT) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 32 hedge fund portfolios held Veracyte, Inc. (NASDAQ:VCYT) at the end of the first quarter, up from 28 in the previous quarter. in Q1 2026, Veracyte, Inc. (NASDAQ:VCYT) reported revenue of $139.1 million, representing 21% year-over-year growth. While we acknowledge the risk and potential of Veracyte, Inc. (NASDAQ:VCYT) 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 Veracyte, Inc. (NASDAQ:VCYT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q2 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.
