Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The Russell Midcap Value Index ended Q4 somewhat lower, down -1.75%, after posting robust gains in Q3. The index provided a 13.07% return for the year. Following the US election, mid-cap value stocks experienced a significant rally with the larger US equity market, hitting all-time highs before declining in December. In the quarter, the fund’s Investor Class fund ARTQX returned -3.70%, Advisor Class fund APDQX posted a return of -3.67%, and Institutional Class fund APHQX returned -3.67%, compared to a -1.75% return for the Russell Midcap Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Artisan Mid Cap Value Fund emphasized stocks such as Polaris Inc. (NYSE:PII). Polaris Inc. (NYSE:PII) is a powersports vehicles manufacturer that operates through Off-Road, On-Road, and Marine segments. The one-month return of Polaris Inc. (NYSE:PII) was -6.10%, and its shares lost 53.92% of their value over the last 52 weeks. On March 14, 2025, Polaris Inc. (NYSE:PII) stock closed at $42.33 per share with a market capitalization of $2.375 billion.
Artisan Mid Cap Value Fund stated the following regarding Polaris Inc. (NYSE:PII) in its Q4 2024 investor letter:
“Our biggest individual detractors in Q4 were Dentsply Sirona, Polaris Inc. (NYSE:PII) and Baxter International. Polaris designs, engineers and manufactures power sports vehicles, operating in three segments: off-road, on-road and marine. This company missed earnings expectations and lowered FY2024 guidance due to continued weak demand for recreational vehicles. Additionally, with dealer inventories still too high, Polaris has had to pursue greater promotional activity through rebates as well as provide cheaper floor plan financing and advertising assistance to dealers—all of which are pressuring margins. Retail weakness is partly a hangover from robust sales during the pandemic that pulled forward demand. Additionally, as inflation has constrained consumer budgets, consumers are deferring big-ticket discretionary purchases and avoiding high financing costs at today’s interest rates. We admit that the challenging sales environment may continue, but with the stock drifting back toward its lowest prices since the pandemic selloff of 2020 and selling cheaply at 11X our estimate of normalized earnings, we added to our position in Q4. The company is well run historically, and current management has demonstrated operating discipline by divesting bad businesses acquired under old management, focusing on the company’s roots in power sports and continuing its history of returning capital to shareholders via dividends and buybacks. Returns over a business cycle are strong, with returns on tangible capital most years in the mid-to-high teens. Though cash generation has fallen—as expected in a tough retail backdrop—Polaris remains well financed.”
A motorcyclist enjoying the open road on a sunny day.
Polaris Inc. (NYSE:PII) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held Polaris Inc. (NYSE:PII) at the end of the fourth quarter compared to 20 in the third quarter. In the fourth quarter of 2024, Polaris Inc.’s (NYSE:PII) sales declined 23% compared to previous year. Similar to Q3, the primary reason for sales decline was the company’s decision to lower dealer inventory during the second half of the year by reducing product shipments to dealers. While we acknowledge the potential of Polaris Inc. (NYSE:PII) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Polaris Inc. (NYSE:PII) and shared the list of dividend stocks that are underperforming in 2025. Artisan Mid Cap Value Fund initiated s position in Polaris Inc. (NYSE:PII) during Q3 2024, recognizing the company’s strong returns, effective leadership, and robust balance sheet. addition, please check out our hedge fund investor letters Q4 2024 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.