Here's Why Polaris (PII) Strongly Rebounded in Q3

Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund’s Investor Class fund ARTQX returned 0.97%, Advisor Class fund APDQX posted a return of 0.98%, and Institutional Class fund APHQX returned 0.97%, compared to a 6.18% return for the Russell Midcap Value Index. Equity markets continued their rally in the third quarter as investors overlooked tariff concerns, driven by strong corporate earnings, rising AI capital expenditures, and hopes for economic support from US fiscal policy and lower interest rates. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-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 -0.28%, and its shares gained 13.91% of their value over the last 52 weeks. On January 2, 2026, Polaris Inc. (NYSE:PII) stock closed at $66.48 per share, with a market capitalization of $3.739 billion.

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

"Our top contributors included nVent Electric, Polaris Inc. (NYSE:PII) and ICON. Polaris designs, engineers and manufactures powersports vehicles. The stock strongly rebounded off its April bottom. A weak retail environment for recreational vehicles followed by uncertainty related to tariffs caused intense selling that culminated in the April low. Due to high dealer inventories industry-wide, 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 pressured margins. Retail weakness was partly a hangover from robust sales during the pandemic that pulled forward demand. Additionally, as inflation constrained consumer budgets, consumers sought to defer big-ticket discretionary purchases and avoid high financing costs amid higher interest rates. The company is controlling what it can. Inventories are now back to a normalized level, which should help margins going forward, and to mitigate tariffs, the company is reducing sourcing from China and increasing sourcing from Mexico andother countries with lower trade barriers. The company is well run historically, and current management has demonstrated operating discipline by divesting less profitable businesses acquired under old management, focusing on the company’s 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. According to our database, 31 hedge fund portfolios held Polaris Inc. (NYSE:PII) at the end of the third quarter, up from 28 in the previous quarter. In Q3 2025, Polaris Inc.’s (NYSE:PII) sales rose 7%, driven by a better Off-Road shipment mix and higher Marine shipments, despite increased promotions. While we acknowledge the potential of Polaris Inc. (NYSE:PII) 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 Polaris Inc. (NYSE:PII) and shared the list of best dividend stocks for a dividend champions list. 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.