SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Smid Cap Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the SMID Cap Composite returned -3.72% on a gross basis (-3.89% net) compared to 2.22% for the Russell 2500 Index and 3.15% return for the Russell 2500® Value Index. The composite returned 5.19% on a gross basis (4.46% net) over the trailing 12 months compared to 11.91% and 12.73% for the indexes, respectively. The letter highlighted the economic lessons learned during the oil price collapse of 2014-15. Initially seen as a positive development for the global economy, the decline in oil prices revealed underlying weaknesses, leading to broader economic impacts beyond the energy sector. The author compares this to the current situation with artificial intelligence (AI), cautioning that while AI is now a fundamental aspect of economic planning and decision-making, its associated risks need to be carefully analyzed. As the market approaches 2026, the investment landscape is shaped by various scenarios, including valuation compression and overcapacity in AI infrastructure, rather than inevitable outcomes. SouthernSun Asset Management maintains a disciplined, humble approach focused on intrinsic value and is optimistic about the future but remains aware of historical lessons. In addition, please check the Strategy’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, SouthernSun Smid Cap Strategy highlighted stocks like Generac Holdings Inc. (NYSE:GNRC). Generac Holdings Inc. (NYSE:GNRC) is a leading power generation equipment manufacturer and energy solutions provider. On March 03, 2026, Generac Holdings Inc. (NYSE:GNRC) stock closed at $221.21 per share. One-month return of Generac Holdings Inc. (NYSE:GNRC) was 24.85%, and its shares gained 70.07% over the past 52 weeks. Generac Holdings Inc. (NYSE:GNRC) has a market capitalization of $12.982 billion.
SouthernSun Smid Cap Strategy stated the following regarding Generac Holdings Inc. (NYSE:GNRC) in its fourth quarter 2025 investor letter:
“Generac Holdings Inc. (NYSE:GNRC) was a bottom performer in the SMID Cap strategy in the fourth quarter. Generac’s most profitable product group is Home Standby (HSB) generators, and in 2025, the U.S. experienced the fewest power outages (related to weather or other grid failures) since 2015. The lower demand for HSB will also create slightly lower margins for the year. The Commercial and Industrial segment is doing well with sales increasing 9% over last year, and their home automation business, led by the Ecobee product, is growing in revenue and profitability. In addition, they are seeing strong demand for their recently introduced large gensets that will be used for data center applications. We spent time with management during the quarter and continue to believe that GNRC is well positioned as the dominant player in HSB and is well positioned to take advantage of growth opportunities with data center customers.”
Generac Holdings Inc. (NYSE:GNRC) is not on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 56 hedge fund portfolios held Generac Holdings Inc. (NYSE:GNRC) at the end of the fourth quarter, up from 54 in the previous quarter. In Q4 2025, Generac Holdings Inc.’s (NYSE:GNRC) net sales decreased 12% year-over-year to $1.1 billion. While we acknowledge the risk and potential of Generac Holdings Inc. (NYSE:GNRC) 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 Generac Holdings Inc. (NYSE:GNRC) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Generac Holdings Inc. (NYSE:GNRC) and shared a list of stocks Jim Cramer discussed. In Q4 2025, Conestoga Capital Advisors divested its holdings in Generac Holdings Inc. (NYSE:GNRC) due to near term fundamental challenges. In addition, please check out our hedge fund investor letters Q4 2025 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.
