Resideo Technologies (REZI) Slid on Cautious Market Outlook

Ariel Investments, an investment management company, released its “Ariel Focus Fund” first-quarter investor letter. A copy of the letter can be downloaded here. At the end of the first quarter of 2025, most major U.S. indices recorded losses as investors sought safety. Initial optimism for another strong year of U.S. performance, fueled by economic momentum and the new administration’s pro-business policies, faded as concerns over tariffs and uncertainty in policy direction. In the environment, the fund returned -3.88%, lagging the Russell 1000 Value Index’s +2.14% gain, and ahead of the S&P 500 Index’s -4.27% return. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, Ariel Focus Fund highlighted stocks such as Resideo Technologies, Inc. (NYSE:REZI). Resideo Technologies, Inc. (NYSE:REZI) develops, manufactures, and sells comfort, energy management, and safety and security solutions. The one-month return of Resideo Technologies, Inc. (NYSE:REZI) was 0.76%, and its shares gained 5.48% of their value over the last 52 weeks. On June 11, 2025, Resideo Technologies, Inc. (NYSE:REZI) stock closed at $21.17 per share, with a market capitalization of $3.144 billion.

Ariel Focus Fund stated the following regarding Resideo Technologies, Inc. (NYSE:REZI) in its Q1 2025 investor letter:

“In contrast, supplier of residential thermal, comfort and security solutions, Resideo Technologies, Inc. (NYSE:REZI), declined over the period. Despite strong quarterly earnings results, shares traded lower on management’s relatively cautious market outlook, tariff concerns and higher for longer interest rates. Although 2025 guidance came in above expectations with broad-based growth across product categories and the integration of Snap One synergies running ahead of schedule, management did not disclose the potential impact tariffs could have on the business. That said, the company believes price increases, inventory positioning and running factories at different utilization rates can help mitigate near-term pressure. We believe REZI’s earnings potential is underappreciated as the company is entering a new phase of sustainable growth driven by a secular preference for more connected smart home solutions and product innovation.”

Resideo Technologies, Inc. (NYSE:REZI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Resideo Technologies, Inc. (NYSE:REZI) at the end of the first quarter, which was 28 in the previous quarter. In Q1 2025, Resideo Technologies, Inc. (NYSE:REZI) reported revenue of approximately $1.8 billion, representing an increase of 19% year-over-year. While we acknowledge the potential of Resideo Technologies, Inc. (NYSE:REZI) 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 Resideo Technologies, Inc. (NYSE:REZI) and shared Ariel Focus Fund’s views on the company in the previous quarter. 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.