Is Aris Water Solutions (ARIS) Driving Sustainable Practices in Oil Production?

Artisan Partners, an investment management company, released its “Artisan Small Cap Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. Investor sentiment at the beginning of 2025 was positive. In 2024, US equities once again outperformed their global counterparts, and there was optimism that the new Republican administration would strengthen the idea of US exceptionalism. However, the first quarter did not meet those expectations. In the quarter, its Investor Class fund ARTSX returned -10.14%, Advisor Class fund APDSX posted a return of -10.10%, and Institutional Class fund APHSX returned -10.07%, compared to a return of -11.12% for the Russell 2000 Growth Index. Markets experienced weakness due to rising fiscal and geopolitical uncertainties during the quarter. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first-quarter 2025 investor letter, Artisan Small Cap Fund highlighted stocks such as Aris Water Solutions, Inc. (NYSE:ARIS). Aris Water Solutions, Inc. (NYSE:ARIS) is an environmental infrastructure and solutions company. The one-month return of Aris Water Solutions, Inc. (NYSE:ARIS) was -10.33%, and its shares gained 52.64% of their value over the last 52 weeks. On June 2, 2025, Aris Water Solutions, Inc. (NYSE:ARIS) stock closed at $22.80 per share with a market capitalization of $1.35 billion.

Artisan Small Cap Fund stated the following regarding Aris Water Solutions, Inc. (NYSE:ARIS) in its Q1 2025 investor letter:

“Three of those new GardenSM positions were FTAI Aviation, Aris Water Solutions, Inc. (NYSE:ARIS) and Sweetgreen. Aris offers full-cycle water handling and recycling solutions in the Permian Basin with a focus on the Delaware Basin. Wastewater is a by product of oil production that needs to be collected and safely disposed of, and our research indicates that the water-to-oil ratio in the Delaware Basin is also among the highest. Aris has built proprietary assets, including collection pipelines, water-handling facilities and disposal wells in the region, with more pipeline and facilities permitted but not yet installed. A more hydrocarbon-friendly policy environment should allow continued drilling activity in the Delaware Basin, one of the most attractive areas for oil production in the US, and we believe margins should continue to expand as the company improves execution. Meanwhile, the company has been exploring new use cases for its collected water, including mineral extraction and desalination. Its water could also become an environmentally conscious water usage option for hyperscalers, given increasing demand for water sources for use in datacenter cooling.”

Is Aris Water Solutions, Inc. (ARIS) the Best Performing Utilities Stock So Far in 2025?

An industrial complex with a pillar of steam billowing from a water recycling plant.

Aris Water Solutions, Inc. (NYSE:ARIS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Aris Water Solutions, Inc. (NYSE:ARIS) at the end of the first quarter, which was 31 in the previous quarter. While we acknowledge the potential of Aris Water Solutions, Inc. (NYSE:ARIS) 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 undervalued AI stock set for massive gains.

In another article, we covered Aris Water Solutions, Inc. (NYSE:ARIS) and shared Carillon Eagle Small Cap Growth Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 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.