Several stocks in the portfolio had strong returns in the quarter. Leading global floor product manufacturer, Mohawk Industries, Inc. (NYSE:MHK) posted a +16.90% gain on financial results that were in line for the second consecutive quarter, however forward looking guidance fell short of expectations. Nonetheless, MHK exhibited sequential improvement in organic growth as well as reduced production rates to balance inventory with customer demand and to manage working capital. In an effort to further address its present operating environment, MHK put through a price increase to offset higher energy and materials as well as consolidated inefficient operations, enhanced manufacturing processes and reduced overhead expenses. Furthermore, the company continues to introduce new products to differentiate its offerings and enhance margins. We have confidence in this owner-operated management team and believe that moderating cyclical headwinds support an improving growth/margin cadence. At current levels, MHK is trading at a 40% discount to our estimate of private market value.
From John Rogers (Trades, Portfolio)' second-quarter 2019 Ariel Fund commentary.
