15 Small-Cap Manufacturing Stocks Hedge Funds Are Buying

7. Lennox International Inc. (NYSE:LII)

Market Capitalization as of April 25: $18.71 billion

Number of Hedge Fund Holders: 39

Lennox International Inc. (NYSE:LII) designs, manufactures, and markets products for the heating, ventilation, air conditioning, and refrigeration markets. The company operates in segments called the Home Comfort Solutions and the Building Climate Solutions. It sells its products and services through direct sales, distributors, and company-owned parts and supplies stores.

The HCS (Home Comfort Solutions) segment increased its sales by 7% year-over-year in Q1 2025. This was driven by a positive product mix, as ~50% of the segment’s equipment sales during the quarter were the new, lower Global Warming Potential (GWP) R-454B product. The price yields achieved on this product were in line with the company’s expectation of 10%.

While overall sales volumes were flat year-over-year, this was a result of destocking headwinds from Q4 2024 pre-buy being offset by the stocking of the new R-454B products. HCS did not experience significant destocking in Q1 but anticipates some in Q2. The transition to low-GWP products is progressing, with R-410A inventory levels nearly depleted. This transition positions Lennox International Inc. (NYSE:LII) to capitalize on the demand for environmentally friendly HVAC solutions.