Is Masco Corp. (NYSE:MAS): The Underrated Manufacturing Stock Hedge Funds Are Snatching Up?

We recently released a list of the 15 Little-Known Manufacturing Companies That Hedge Funds Are Snapping Up In this piece, we will examine how Masco Corp. (NYSE:MAS) measures up against other small-cap manufacturing companies.

On February 26, Liz Ann Sonders, who serves as the Chief Investment Strategist at Charles Schwab, appeared on CNBC’s 'Squawk on the Street' to address potential hurdles for manufacturing caused by persistent policy uncertainties. According to her observations, investor focus currently leans towards apprehensions regarding economic expansion rather than inflationary pressures. During this discussion, she highlighted several deteriorating metrics including dips in consumer confidence levels, lower retail sales numbers, and diminishing service sector performance indicated through Purchasing Managers' Indexes (PMIs). Additionally, she pointed out that heightened political unpredictability deters businesses from committing to significant investments in major equipment and curtails overall expenditure strategies. She further elaborated that throughout the last twelve months, fluctuations in bond yields were largely influenced either by shifts in perceived inflation trends or indications of changing economic health—whether these movements involved upward spikes or drops. Her analysis suggests that recently observed decreases in yield rates can be attributed predominantly to fears concerning an impending slowdown in economic activity instead of optimistic predictions around decreasing price hikes. Consequently, this shift has steered many investors toward safer asset classes deemed less risky, mirroring a general inclination among financial players to adopt cautious stances amidst uncertain times.

The latest Purchasing Managers' Index (PMI) indicates a downturn in service activities, whereas manufacturing seems to be gaining momentum. This shift might lead to a favorable alignment between both industries. However, according to Sonders, the uptick in manufacturing may face threats from continuing policy uncertainties. Consequently, numerous firms within the manufacturing domain are becoming more hesitant when planning for future expansions and capital expenditures. Sonders further noted that although substantial deficit reduction talks were initially aiming for $2 trillion, the real savings fall well short of that figure—currently under $10 billion. In her view, concentrating solely on these modest budgetary cutbacks would be too hasty since various factors like tariff adjustments, immigration policies, deportations, and regulatory modifications are jointly exerting negative pressures on economic forecasts and driving up anticipated inflation rates. Additionally, she mentioned that proposed alterations in taxation primarily impact end-of-year projections instead of influencing immediate business trends.

Our Methodology

Initially, we reviewed financial news articles, along with data from the iShares U.S. Manufacturing ETF and the Vanguard Industrials ETF, alongside Insider Monkey’s Q4 2024 report on hedge fund holdings, to create a roster of small-cap manufacturing equities favored by these investment vehicles. Herein, "small-cap" refers to companies valued at between $10 billion and $20 billion as per records dated April 25th. From this compilation, we pinpointed the top 15 stocks and arranged them based on how many different hedge funds had investments in each one. When multiple securities were backed by the same quantity of funds, their ranking was determined by comparing their respective market capitalizations.

Why do we focus on the stocks that hedge funds amass? It's straightforward: our analysis indicates that mimicking the leading stock choices from premier hedge funds allows us to exceed market performance. Each quarter, our quarterly newsletter's approach chooses 14 small-cap and large-cap stocks, achieving a return of 373.4% since May 2014, surpassing its benchmark by 218 percentage points. s ee more details here ).

An aisle at a home improvement store featuring various kinds of construction materials showcased.

Masco Corp. (NYSE: MAS )

Market Capitalization as of April 25: $12.75 billion

Number of Hedge Fund Holders: 43

Masco Corp. (NYSE:MAS) provides home improvement and building products in North America, Europe, and internationally. The company’s Plumbing Products segment manufactures products like faucets, showerheads, shower drains, and water filtration systems. Its Decorative Architectural Products segment offers paints, primers, specialty coatings, stains, and waterproofing products.

In Q1 2025, the company’s Plumbing segment had its sales increase by ~1%. Within this segment, North American plumbing sales also grew by ~1% due to higher volumes in the spa and sauna business and favorable pricing, which partially offset lower volumes in the retail channel. This performance was achieved despite facing cost increases due to newly enacted tariffs, particularly on imports from China.

However, the Plumbing segment is expected to be significantly impacted by the new tariffs. Masco Corp. (NYSE:MAS) estimates an in-year cost of ~$400 million in 2025 due to these tariffs, before any mitigation efforts. The annualized impact of these incremental tariffs is estimated to be ~$625 million out of a total annualized tariff impact of $675 million for the entire company. However, Masco estimates that it can offset ~$200 to $250 million, or roughly 50% to 65%, of these tariff costs during 2025.

Overall, MAS ranks 5th On our roster of small-cap manufacturing equities favored by hedge funds, we recognize the expansion prospects of MAS. However, our confidence leans toward the notion that artificial intelligence stocks present significant opportunities for substantial gains with quicker turnaround times. Notably, one such AI equity has surged since early 2025, contrasting sharply against widely recognized AI shares which have dipped roughly 25% during this period. Should you seek an alternative AI investment over MAS that boasts a price-to-earnings ratio under five, consider reviewing our detailed analysis outlined in our latest report. cheapest AI stock .

READ NEXT: 20 Top AI Stocks You Should Consider Purchasing Today and 30 Top Stocks to Purchase Currently as Recommended by Billionaires .

Disclosure: There are no conflicts of interest. This article was initially published here. Insider Monkey .