Shares of Mohawk Industries, Inc. (NYSE:MHK) continue to move higher on volume spike as short interest drops. The stock has been on an impressive run since the start of the year and is now up by more than 25% for the year.
Introduction of innovative products, improving productivity and an increase in prices to offset inflation appears to have strengthened investor confidence in the flooring manufacturer. Mohawk Industries continues to enjoy a competitive edge over its peers like Dixie Group Inc. (NASDAQ:DXYN) and Crown Crafts, Inc. (NASDAQ:CRWS) thanks to industry leading designs and patented technologies as well as brands.
Institutional holding
The largest investor in the manufacturer of products for residential and commercial spaces is Lorberbaum Jeffrey S. Regulatory fillings indicate that the American billionaire trimmed its stake in Mohawk Industries to 8.29 million shares from $9.87 million as of the end of August. The holdings currently represent a stake of 11.2%.
The reduction could be a profit-taking play given the stock’s impressive performance for the year that has seen it record a new 52 week high. Vanguard Group is the second largest investor in the company with a holding of 6.18 million shares worth $1.49 billion. JP Morgan Chase & Company comes a close third with a holding of 5.03 million shares valued at $1.22 billion.
Key Drivers and Headwinds
Mohawks strong performance for the year is attributed to an opportunistic approach to acquisitions that has strengthened its growth metrics. Early this year the company completed the acquisition of two ceramic manufacturers in Europe and a carpet nylon polymerization plan in the U.S, further expanding its product portfolio.
Investor confidence in the company has also received a boost from the firm announcing plans to invest $850 million this year on product innovation and enhance automation to drive synergies.
Currency headwinds remain the biggest headwind in Mohawk Industries growing its earnings. The fact that the company generates almost a third of its revenues from customers outside the U.S means its earnings will always take a hit on fluctuations in exchange rates.
Currency headwinds hurt sales last year by $69 million. The company is also set to incur higher startup costs because of increased production and marketing activities.
