Ariel Investments, an investment management company, released its “Ariel Small Cap Value Strategy” second-quarter 2023 investor letter. A copy of the same can be downloaded here. Global markets continued their upward trend in the second quarter, exceeding expectations. Meanwhile US economy continues to show signs of economic slowdown as tighter credit conditions weigh on consumers and business confidence. Against this backdrop, the fund advanced +5.19% gross of fees (+4.93% net of fees) in the second quarter, ahead of the Russell 2000 Value Index’s +3.18% gain and relatively in line with the Russell 2000 Index’s +5.21% return. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Ariel Small Cap Value Strategy highlighted stocks like Generac Holdings Inc. (NYSE:GNRC) in the Q2 2023 investor letter. Headquartered in Waukesha, Wisconsin, Generac Holdings Inc. (NYSE:GNRC) is a power generation equipment, energy storage systems, and other power product manufacturer and supplier. On September 6, 2023, Generac Holdings Inc. (NYSE:GNRC) stock closed at $118.46 per share. One-month return of Generac Holdings Inc. (NYSE:GNRC) was 9.02%, and its shares lost 49.21% of their value over the last 52 weeks. Generac Holdings Inc. (NYSE:GNRC) has a market capitalization of $7.373 billion.
Ariel Small Cap Value Strategy made the following comment about Generac Holdings Inc. (NYSE:GNRC) in its Q2 2023 investor letter:
“Leading global manufacturer of power generation equipment, Generac Holdings Inc. (NYSE:GNRC), also advanced and was among the top 5 performers in the S&P 500 this quarter. Shares traded higher amid reports of widespread power outages and oppressive heat across the southern U.S. Moreover, demand trends for home standby generators have begun to pick up, while pandemic related headwinds from high inventory levels began to subside. In our view, GNRC’s unmatched distribution network and product portfolio enjoys strong brand advantages, creating a wide moat for this niche business which commands a 75% market share in the North American residential market. Historically, growth has been limited due to a lack of awareness around the benefits of having a home standby generator, as well as its high price point. However, elevated power outage events, both weather related and due to aging infrastructure, have tipped the scales in both the residential and commercial markets. We expect these heightened consumer sensitivities to result in a long runway of penetration across an expanding addressable market, margin expansion and free cash flow generation.”
Generac Holdings Inc. (NYSE:GNRC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Generac Holdings Inc. (NYSE:GNRC) at the end of second quarter which was 32 in the previous quarter.
We discussed Generac Holdings Inc. (NYSE:GNRC) in another article and shared the top stock picks of Michael Burry’s Scion Asset Management as of Q2 2023. In addition, please check out our hedge fund investor letters Q2 2023 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.
