Billionaire David Tepper’s 5 Small and Midcap Stock Picks with Huge Upside Potential

In this article, we will list Billionaire David Tepper’s 5 small and midcap stock picks with huge upside potential. Please visit Billionaire David Tepper’s 10 Small and Midcap Stock Picks with Huge Upside Potential if you would like to see the extended list and the methodology behind it.

5. Mohawk Industries, Inc. (NYSE:MHK)

Appaloosa Management LP’s Stake: $74 Million  

David Tepper of Appaloosa Management LP has had a long term bet on Mohawk Industries, Inc. (NYSE:MHK) stock. The firm first appeared in 13F filings for the fund in the second quarter of 2014. Back then, this position comprised just over 500,000 shares. The fund increased this to around 760,000 shares by the second quarter of 2016. Thereafter, this stake was trimmed and sold off completely by early 2018. A new position in the company was opened in the second quarter of 2025. This stake comprised just 65,000 shares. In the third quarter of 2025, this was increased by 148% to 161,000 shares. Filings for the fourth quarter of 2025 show that the fund owns 675,000 shares in the company, up 317% compared to the previous quarter.

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Hedge funds like Mohawk Industries, Inc. (NYSE:MHK) stock for a number of reasons. One of these is that the firm is trading well below its intrinsic value. In recent years, the stock has traded at a significant discount to its book value (Price-to-Book around 0.72x). Hedge funds often view a P/B ratio under 1 for a market leader as a strong margin of safety. Institutional investors are also betting on Mohawk’s aggressive internal restructuring. The company has implemented strategic initiatives expected to yield an additional $100 million in EBITDA by 2026. Despite declining volumes in the broader flooring industry, Mohawk has managed to increase its adjusted EBIT margins through better price/mix strategies and productivity improvements.