Resideo Technologies (REZI) Propelled on Strong Demand and Increased Guidance

Ariel Investments, an investment management company, released its “Ariel Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S equities rallied in the third quarter, driven by the Federal Reserve’s first rate cut of the year, strong corporate earnings, and broadening market participation. The continued enthusiasm for AI led to outsized gains in technology, while small caps outperformed as capital shifted into undervalued segments of the market. Against this backdrop, Ariel Fund returned +12.39% in the quarter, surpassing the Russell 2500 Value Index’s +8.17% return and lagging behind the Russell 2000 Value Index’s +12.60% gain. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its third-quarter 2025 investor letter, Ariel 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 6.60%, and its shares gained 115.20% of their value over the last 52 weeks. On October 23, 2025, Resideo Technologies, Inc. (NYSE:REZI) stock closed at $43.47 per share, with a market capitalization of $6.467 billion.

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

"Supplier of residential thermal, comfort and security solutions, Resideo Technologies, Inc. (NYSE:REZI) also advanced driven by strong earnings and a subsequent raise in guidance. Organic revenue, EBITDA and adjusted EPS all exceeded expectations. The company also finalized its agreement with Honeywell, eliminating future financial obligations under their indemnification arrangement. In our view, REZI remains undervalued, with long-term growth supported by rising demand for connected smart home solutions and continued product innovation."

Resideo Technologies, Inc. (NYSE:REZI) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 25 hedge fund portfolios held Resideo Technologies, Inc. (NYSE:REZI) at the end of the second quarter, compared to 27 in the previous quarter. Resideo Technologies, Inc. (NYSE:REZI) reported record high net revenue of $1.94 billion in Q2 2025, which was up 22% year-over-year and up 8% on an organic basis. While we acknowledge the potential of Resideo Technologies, Inc. (NYSE:REZI) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Resideo Technologies, Inc. (NYSE:REZI) and shared the list of stocks Jim Cramer discussed. Resideo Technologies, Inc. (NYSE:REZI) contributed to Ariel Fund's performance in the previous quarter as well. In addition, please check out our hedge fund investor letters Q3 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.