Is Mohawk Industries, Inc. (MHK) Going to Burn These Hedge Funds?

We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Mohawk Industries, Inc. (NYSE:MHK) based on that data.

Mohawk Industries, Inc. (NYSE:MHK) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. Mohawk Industries, Inc. (NYSE:MHK) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 64. There were 44 hedge funds in our database with MHK positions at the end of the second quarter. Our calculations also showed that MHK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s take a gander at the new hedge fund action encompassing Mohawk Industries, Inc. (NYSE:MHK).

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

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in MHK over the last 25 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, Pzena Investment Management was the largest shareholder of Mohawk Industries, Inc. (NYSE:MHK), with a stake worth $282.1 million reported as of the end of September. Trailing Pzena Investment Management was Ariel Investments, which amassed a stake valued at $233.6 million. Arrowstreet Capital, Citadel Investment Group, 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 5.8% of its 13F portfolio. Scopia Capital is also relatively very bullish on the stock, designating 5.57 percent of its 13F equity portfolio to MHK.

Because Mohawk Industries, Inc. (NYSE:MHK) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there were a few fund managers who sold off their entire stakes heading into Q4. Interestingly, James Parsons’s Junto Capital Management cut the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling about $32.4 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also said goodbye to its stock, about $17.6 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 6 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Mohawk Industries, Inc. (NYSE:MHK) but similarly valued. We will take a look at GFL Environmental Inc. (NYSE:GFL), Equitable Holdings, Inc. (NYSE:EQH), DaVita Inc (NYSE:DVA), Annaly Capital Management, Inc. (NYSE:NLY), Jack Henry & Associates, Inc. (NASDAQ:JKHY), Ares Management Corp (NYSE:ARES), and Pentair plc (NYSE:PNR). 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
GFL 19 758568 -4
EQH 46 1704423 1
DVA 39 4811137 0
NLY 15 34941 -4
JKHY 21 200996 -1
ARES 22 727606 2
PNR 24 844523 -1
Average 26.6 1297456 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $1297 million. That figure was $1263 million in MHK’s case. Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand Annaly Capital Management, Inc. (NYSE:NLY) is the least popular one with only 15 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 53.9. 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 28.6% in 2021 through November 30th 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 -5.4% since the end of September (through 11/30) 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.