by Bill Wysor | February 28, 2014 7:00 am
Picking stocks successfully is a rare talent — and sometimes key talent moves to greener pastures for the promise of better opportunities. Investors have the same quest — and are presented with a fine chance to invest with two proven managers who left Janus a few months ago to join Meridian Funds.
Chad Meade and Brian Schaub successfully guided Janus Triton (JATTX) from 2006 through part of 2013. In that time, the duo outperformed their benchmark Russell 2000 by an average of about 4.5% annually. The pair also managed the small-cap-oriented Janus Venture (JAVTX) for about three years and significantly improved performance on this fund while attracting assets as well.
As another benefit, they successfully were able to reduce risk on JAVTX, which had been a weakness of this fund under previous management.
However, now that they’ve gone to Meridian Funds, my interest is piqued. So … what are they managing now?
Meade and Schaub have worked together for about eight years and are committed to fundamental “bottom-up” research when it comes to picking mid- and small-cap stocks. Meridian Funds’ newly launched (Dec. 16) Meridian Small Cap Growth (MSGAX) should be the perfect vehicle to continue their winning ways.
MSGAX is brand-new, but is squarely focused on the small-cap space and currently holds 96 stocks. Industrials account for 31% of the portfolio, with information technology names accounting for 24% as of Dec. 31, 2013. That results in top holdings including Clean Harbors (CLH), Carter’s (CRI), Heritage-Crystal Clean (HCCI), Cadence Design Systems (CDNS) and Vista Print (VPRT).
Fund expenses are estimated to be 1.9%, or $190 for every $10,000 invested. I would anticipate that this number will come down some over time as assets grow.
While it’s often a smart move to buy a fund with a proven track record, sometimes buying a new fund guided by fine management is a unique opportunity. With the list of compelling funds that have recently closed to new investors growing, this new selection by Meridian Funds could be a timely way to gain small-cap exposure.
For a fund that combines compelling small and mid-cap names, Meridian Growth Fund (MRAGX) is worth a look and should fit well with the type of stocks that Meade and Schaub have owned before when they successfully ran Janus Triton.
Once again, fundamental research is the cornerstone of the process, with MRAGX’s portfolio currently holding 80 stocks. This fund is an established one, with $2.2 billion in assets. Industrials are presently 32% of the fund, with information technology names accounting for 20%. Recent top holdings will look familiar, with CLH, CDNS and VPRT getting the nod, as well as Wolverine World Wide (WWW) and Gartner, Inc. (IT).
Expenses run 1.6%, or $160 for every $10,000 invested.
Since the present managers started on this fund last September, fund performance numbers simply do not mean a lot. However, the strong run that this duo had at Janus bodes well for success here as well.
As of this writing, Bill Wysor was long JAVTX and plans to initiate a position in MSGAX.
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