Competitive Pressure Hurt Generac Holdings' (GNRC) Performance in Q4

Conestoga Capital Advisors, an asset management company, released its fourth-quarter 2025 investor letter. As many believe, US equities experienced solid returns in 2025, with double-digit gains across all major indices, yet underlying conditions revealed extreme volatility and market leadership. A copy of the letter can be downloaded here. In Q4 2025, Conestoga Capital Advisors SMid Cap Strategy trailed the Russell 2500 Growth Index, returning -2.71% vs. 0.33% for the Index. Relative performance fluctuated throughout the quarter.  Negative stock selection in Industrials and Real Estate drove underperformance in the quarter, while underweight in the volatile biotechnology industry also impacted relative returns. Nevertheless, positive stock selection in Financials and Basic Materials countered these losses. From a factor standpoint, a "tug-of-war" between high- and low-quality elements lasted throughout the quarter. For the full year, the composite delivered a total return of -4.71% net of fees, compared to the benchmark’s 10.31% return. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Conestoga Capital Advisors highlighted stocks like Generac Holdings Inc. (NYSE:GNRC). Generac Holdings Inc. (NYSE:GNRC) is a leading power generation equipment manufacturer and energy solutions provider. On February 19, 2026, Generac Holdings Inc. (NYSE:GNRC) stock closed at $227.47 per share. One-month return of Generac Holdings Inc. (NYSE:GNRC) was 31.48%, and its shares gained 64.79% over the past twelve months. Generac Holdings Inc. (NYSE:GNRC) has a market capitalization of $13.349 billion.

Conestoga Capital Advisors stated the following regarding Generac Holdings Inc. (NYSE:GNRC) in its fourth quarter 2025 investor letter:

"Generac Holdings Inc. (NYSE:GNRC) manufactures power generation and energy storage equipment for residential, commercial, and industrial customers. The position was sold in 4Q as near term fundamentals remain challenged by demand normalization, elevated channel inventories, and continued margin pressure, limiting visibility into a sustained earnings recovery. While long-term opportunities in energy resilience remain attractive, increased cyclicality and execution uncertainty reduce alignment with our quality and stability criteria, leading us to reallocate capital toward opportunities with clearer growth durability."

Generac Holdings Inc. (NYSE:GNRC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 54 hedge fund portfolios held Generac Holdings Inc. (NYSE:GNRC) at the end of the third quarter, up from 51 in the previous quarter. In Q4 2025, Generac Holdings Inc.'s (NYSE:GNRC) net sales decreased 12% year-over-year to $1.1 billion. While we acknowledge the potential of Generac Holdings Inc. (NYSE:GNRC) 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 Generac Holdings Inc. (NYSE:GNRC) and shared Pelican Bay Capital Management's views on the company. In addition, please check out our hedge fund investor letters Q4 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.