Here’s Why Generac Holdings (GNRC) Declined in Q4

Ariel Investments, an investment management company, released its “Ariel Focus Fund” fourth-quarter investor letter. A copy of the same can be downloaded here.  In the fourth quarter, the fund increased 11.95%, compared to a 12.42% return for the Russell 1000 Value Index and a 7.56% return for the S&P 500 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

Ariel Focus Fund highlighted stocks Generac Holdings Inc. (NYSE:GNRC) in the Q4 2022 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 February 2, 2023, Generac Holdings Inc. (NYSE:GNRC) stock closed at $130.96 per share. One-month return of Generac Holdings Inc. (NYSE:GNRC) was 29.99%, and its shares lost 53.22% of their value over the last 52 weeks. Generac Holdings Inc. (NYSE:GNRC) has a market capitalization of $8.297 billion.

Ariel Focus Fund made the following comment about Generac Holdings Inc. (NYSE:GNRC) in its Q4 2022 investor letter:

“Alternatively, leading global manufacturer of power generation equipment Generac Holdings Inc. (NYSE:GNRC) underperformed in the quarter following an earnings miss due to headwinds in its solar business and a near-term inventory issue that should be worked through in the coming quarters. Subsequently, management announced a downward revision to full year guidance. 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 of awareness in both the residential and commercial markets. These heightened consumer sensitivities should result in a long runway of market penetration, margin expansion and free cash flow generation.”

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Generac Holdings Inc. (NYSE:GNRC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Generac Holdings Inc. (NYSE:GNRC) at the end of the third quarter which was 34 in the previous quarter.

We discussed Generac Holdings Inc. (NYSE:GNRC) in another article and shared Artisan Partners’ views on the company. In addition, please check out our hedge fund investor letters Q4 2022 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.