Why This Fund Trimmed a $28 Million Resideo Stake Despite a Booming Stock Rally

Core Insights - Resideo Technologies, Inc. is a prominent provider of residential comfort and security solutions, leveraging its distribution network and recognized brands to meet the needs of commercial and residential customers [1] - The company operates through two segments: Products & Solutions and ADI Global Distribution, generating revenue from product sales and distribution [2] - Resideo's stock (REZI) has increased by 48% over the past year, significantly outperforming the S&P 500, which rose by 15% in the same period [2] Financial Performance - Resideo reported record net income of $156 million, a remarkable increase of 680% year over year, and record adjusted EBITDA of $229 million, up 21% [5] - Gross margins approached nearly 30%, with both operating segments expanding margins, indicating strong execution rather than temporary cost cuts [5] Investment Activity - BeaconLight Capital reduced its stake in Resideo by approximately 176,000 shares, but the remaining shares valued at $27.85 million still represent 13.74% of the fund's total reportable U.S. equity assets of $202.73 million [3][4] - Despite the reduction, Resideo remains BeaconLight's largest position, suggesting a disciplined approach to portfolio management rather than a loss of confidence in the company [6] Market Context - Resideo is positioned within a portfolio concentrated in industrials, materials, and infrastructure, aligning well as a cash-generating, asset-heavy business linked to essential housing and safety systems [7] - Management has guided for up to $832 million in full-year adjusted EBITDA, indicating a positive outlook for the company's financial performance [7]