Beyond the AI Hype: Why Giverny Capital Is Betting on Industrial Stalwart Hawkins (HWKN)
In its recently released fourth-quarter 2025 letter to investors, Giverny Capital Asset Management outlined a year of stark contrasts. While the firm's portfolio delivered a solid 12.58% year-to-date return, it notably trailed the S&P 500's 17.88% surge. The culprit, as Giverny sees it, is a market narrative overwhelmingly focused on a handful of mega-cap technology and AI stocks—a sector where the fund is deliberately underweight.
"Our portfolio companies are executing superbly, growing earnings and returning capital to shareholders," the letter stated. "Yet, the market's singular fixation on AI investments has created a disconnect, overshadowing value elsewhere." This environment, Giverny suggests, has opened opportunities in overlooked industrial and niche leaders.
One such opportunity is the fund's new holding: Hawkins, Inc. (NASDAQ: HWKN). The Minnesota-based company is a leading distributor and blender of specialty chemicals and ingredients critical for water treatment, food production, and industrial processes. Trading at $130.25 per share in late January 2026, Hawkins boasts a market cap of approximately $2.7 billion and has seen its shares climb over 15% in the past year.
Giverny's thesis appears rooted in fundamentals over hype. Hawkins operates in essential, non-discretionary markets with high barriers to entry. The ongoing trends of infrastructure renewal, stringent water quality standards, and domestic supply chain resilience ("onshoring") provide a steady, long-term tailwind for its business—a stark contrast to the volatile and speculative promises of some AI ventures.
Interestingly, hedge fund interest in Hawkins has waned slightly, with 12 funds holding the stock at the end of Q3 2025, down from 17 the previous quarter. Giverny's move is a contrarian play, betting that the company's reliable cash flows and strategic market position are undervalued in the current climate.
Analyst & Investor Commentary:
Michael Thorne, Portfolio Manager at Steadfast Capital: "Giverny is making a classic value move. Hawkins is the definition of a 'picks and shovels' play—it supplies essential materials to critical industries. In an uncertain macro environment, that predictability is a premium asset the market is currently ignoring."
David Chen, Technology Sector Analyst: "While I respect Giverny's discipline, this feels like a defensive crouch. The AI revolution is creating exponential value, and capital allocated to low-growth industrials is capital missing out on generational shifts. Hawkins is a fine company, but it's not where the future is being built."
Sarah Gibson, Independent Investor: "Finally! Someone is talking about real companies that make real things. I'm so tired of the AI bubble talk. Companies like Hawkins keep our water clean and our factories running. That's tangible value, not just lines of code and hype. Giverny's move is a breath of fresh air."
Raj Patel, Chief Strategist at Horizon Insights: "This isn't just about one stock. Giverny's entire letter is a critique of market concentration. Their Hawkins pick is a proxy for a broader strategy: seeking quality in the shadows of the 'Magnificent Seven.' It's a high-conviction bet that the gap between price and intrinsic value has become too wide in the old economy."
The broader implication of Giverny's strategy is a question of market timing. Is the AI frenzy a permanent state or a cyclical bubble? By pivoting to foundational industrial names like Hawkins, Giverny is positioning for a potential rotation, betting that durability will ultimately outperform disruption in the coming quarters.