Polaris (PII) Declined on Weak Demand

Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The growth stock trade that had driven U.S. stocks higher since late 2022 came undone in the first quarter of 2025. In the quarter, the fund’s Investor Class fund ARTQX returned -1.03%, Advisor Class fund APDQX posted a return of – 0.97%, and Institutional Class fund APHQX returned -0.97%, compared to a -2.11% return for the Russell Midcap Value Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Artisan Mid Cap Value Fund highlighted stocks such as Polaris Inc. (NYSE:PII). Polaris Inc. (NYSE: PII) is a manufacturer of powersports vehicles, operating through three segments: Off-Road, On-Road, and Marine. The one-month return of Polaris Inc. (NYSE:PII) was 20.50%, and its shares lost 49.02% of their value over the last 52 weeks. On June 3, 2025, Polaris Inc. (NYSE:PII) stock closed at $40.59 per share, with a market capitalization of $2.304 billion.

Artisan Mid Cap Value Fund stated the following regarding Polaris Inc. (NYSE:PII) in its Q1 2025 investor letter:

“Our biggest detractors included Bio-Rad Laboratories, nVent Electric and Polaris Inc. (NYSE:PII). Polaris designs, engineers and manufactures powersports vehicles, operating in three segments: off-road, on-road and marine. Demand for recreational vehicles has remained weak, and now tariffs create additional growth challenges. Due to high dealer inventories, Polaris has had to pursue greater promotional activity through rebates as well as provide cheaper floorplan 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, it now sells cheaply at a mere single-digit P/E based on our estimate of normalized earnings. The company is well run historically, and current management has demonstrated operating discipline by divesting bad businesses acquired under old management, focusing roots in powersports 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.”

Polaris Inc. (NYSE:PII) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held Polaris Inc. (NYSE:PII) at the end of the first quarter, which was 26 in the previous quarter. 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 undervalued AI stock set for massive gains.

In another article, we covered Polaris Inc. (NYSE:PII) and shared the list of best dividend stocks with high yields. In Q1 2025, SouthernSun Small Cap Strategy exited its position in Polaris Inc. (NYSE:PII) due to outsized tariff risk. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.