Here is What Hedge Funds Think About Mohawk Industries, Inc. (MHK)

In this article we will analyze whether Mohawk Industries, Inc. (NYSE:MHK) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Mohawk Industries, Inc. (NYSE:MHK) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. Mohawk Industries, Inc. (NYSE:MHK) was in 44 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 64. Our calculations also showed that MHK isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding Mohawk Industries, Inc. (NYSE:MHK).

Do Hedge Funds Think MHK Is A Good Stock To Buy Now?

At Q2’s end, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the first quarter of 2020. On the other hand, there were a total of 32 hedge funds with a bullish position in MHK a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is MHK A Good Stock To Buy?

Among these funds, Pzena Investment Management held the most valuable stake in Mohawk Industries, Inc. (NYSE:MHK), which was worth $308.9 million at the end of the second quarter. On the second spot was Ariel Investments which amassed $241.7 million worth of shares. Arrowstreet Capital, Millennium Management, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position SAYA Management allocated the biggest weight to Mohawk Industries, Inc. (NYSE:MHK), around 8% of its 13F portfolio. Scopia Capital is also relatively very bullish on the stock, earmarking 7 percent of its 13F equity portfolio to MHK.

As aggregate interest increased, key hedge funds were breaking ground themselves. Junto Capital Management, managed by James Parsons, created the biggest position in Mohawk Industries, Inc. (NYSE:MHK). Junto Capital Management had $32.4 million invested in the company at the end of the quarter. Renaissance Technologies also made a $19.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Peter Avellone’s Cartenna Capital, and D. E. Shaw’s D E Shaw.

Let’s also examine hedge fund activity in other stocks similar to Mohawk Industries, Inc. (NYSE:MHK). These stocks are Elastic N.V. (NYSE:ESTC), Masimo Corporation (NASDAQ:MASI), CBOE Global Markets Inc (NASDAQ:CBOE), Lennox International Inc. (NYSE:LII), W.R. Berkley Corporation (NYSE:WRB), Vedanta Ltd (NYSE:VEDL), and Equitable Holdings, Inc. (NYSE:EQH). This group of stocks’ market valuations are similar to MHK’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ESTC 55 3062021 3
MASI 28 317268 -7
CBOE 31 826143 -2
LII 26 465734 1
WRB 36 648828 4
VEDL 10 63949 0
EQH 45 1750676 1
Average 33 1019231 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1019 million. That figure was $1312 million in MHK’s case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 10 bullish hedge fund positions. Mohawk Industries, Inc. (NYSE:MHK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MHK is 68.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately MHK wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MHK were disappointed as the stock returned -6.7% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.