| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.3% | 3.9% | 28.4% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 28.4% | 4.0% | 18.3% | -13.4% | 12.9% | 6.8% |
Diamond Hill's International Strategy returned 3.87% net in Q4 2025, underperforming the MSCI ACWI ex USA Index's 5.05% return. Despite the relative underperformance, the strategy delivered strong absolute returns of 28.41% for the full year 2025. The portfolio benefited from semiconductor exposure, particularly Samsung Electronics and SK hynix, which gained from AI infrastructure demand and improved memory pricing. European banks performed well due to cheap valuations and normalized interest rates, while defense companies benefited from increased government spending on strategic autonomy. Key detractors included gene therapy pioneer uniQure following regulatory setbacks and Chinese e-commerce leader Alibaba facing stagnant growth. The managers added positions in memory chip manufacturer SK hynix, clinical research organization ICON, UK bank NatWest Group, and European defense supplier Theon International. They maintain their disciplined value approach, focusing on companies where market prices have diverged from intrinsic value while taking advantage of volatility to find mispriced opportunities in strong businesses.
International equities offer compelling value opportunities where market prices have materially diverged from intrinsic value, particularly in semiconductor companies benefiting from AI demand, European banks with improved fundamentals, and defense companies supported by rearmament trends.
The manager expects continued opportunities in international markets driven by AI infrastructure demand, European fiscal spending, and corporate governance improvements. They remain focused on finding companies where prices diverge from intrinsic value, taking advantage of volatility as disciplined investors.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 27 2026 | 2025 Q4 | 000660.KS, 005930.KS, BABA, EXO.MI, ICON, NWG.L | AI, Asia, Banking, defense, Europe, international, semiconductors, value | 000660 KS | Strong performance driven by AI infrastructure demand, particularly in memory chips and foundry services. Taiwan's chip foundry and packaging industries saw robust growth with no… |
| Oct 24 2025 | 2025 Q3 | BABA, HDB, HIK LN, ITUB4 BZ, KRN GR, SGX SP, TSM, WISE LN | AI, emerging markets, gold, Governance, Japan |
TSM FRAN HIK |
The fund benefited from Asia-led gains and emphasizes opportunities in Japans governance reforms, AI-linked semiconductors, and select emerging market banks. Managers added exposure to gold… |
| Jul 27 2025 | 2025 Q2 | 7451 JP, 8058 JP, AIBG ID, BABA, BNZL LN, GXI GR, HNAL IN, M5W GR, TSCO, TSM, UCB BB | capital returns, diversification, Governance, international, Intrinsic Value | HAL IN | The letter emphasizes intrinsic value investing in non-U.S. equities trading at discounts to long-term fundamentals. Corporate governance reform, capital returns, and balance sheet strength are… |
| Apr 24 2025 | 2025 Q1 | 2875 JP, 6501 JP, BAP, BATS LN, BYG LN, GLEN LN, IMB LN, MRO LN, SAF FP, SPOT, TSM | - | - | - |
| Dec 31 2024 | 2024 Q4 | 005930 KS, EXO NA, GLEN LN, KRN GR, MAX NA, PRX NA, QURE, SPOT, TSM | - | - | - |
| Sep 30 2024 | 2024 Q3 | 005930 KS, 6UY GR, ARCO, FUSION IN, GXL GR, TSCO LN, UL, WTW | - | - | - |
| Jul 26 2024 | 2024 Q2 | 700 HK, 8058 JP, ARVND IN, CNH, EVO, GXI GR, SPOT, TSM, WALMEX MM, WHC AU | - | - | - |
| Apr 15 2024 | 2024 Q1 | 0QM4 LN, 7451 JP, 8058 JP, BAER SW, EVT GR, ROG SW, SAF FP, SPOT, TSM | - | - | - |
| Jan 2 2024 | 2023 Q4 | 005930 KS, 0Q0J LN, 4503 JP, 8GC SW, ASAZY, CVE, DNOPY, UCB BB | - | - | - |
| Sep 30 2023 | 2023 Q3 | 4GNA GR, CFR SJ, CNQ, CPG LN, DNOPY, FFH CN, HDB, HWDN LN, K34 GR, SNN | - | - | - |
| Jul 25 2023 | 2023 Q2 | 5Y2 GR, EPIA SS, FFH CN, NTO AV, QMCO, SPOT | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
BankingFocus on Metro Bank's transformation into commercial and specialty mortgage bank, with MREL exit providing significant cost savings. PTSB sales process ongoing with potential strategic and private equity bidders. Both banks offer attractive risk-reward profiles despite challenging UK and Irish economic environments. |
Commercial Banking Mortgage Transformation Capital Returns Europe |
DefenseDefense positioning includes exposure to missiles, air defense and space through companies like Lockheed Martin, supported by large order backlogs providing strong long-term visibility amid heightened geopolitical tensions. |
Military Aerospace Geopolitical Security Infrastructure | |
SemiconductorsTaiwan Semiconductor represents the dominant manufacturer for leading fabless chip designers including NVIDIA, Apple, and Broadcom. The global arms race to develop artificial general intelligence will support multiple years of robust growth for foundries with leading-edge capabilities. |
Foundries Advanced Process AI Chips Manufacturing Technology Leadership | |
| 2025 Q3 |
AIAI has become a dominant theme across major equity indices, with Nvidia leading the S&P 500, ASML dominating MSCI EAFE, and TSMC leading emerging markets. The fund benefited from AI-related dynamics, particularly through Samsung's memory products experiencing substantial price increases due to DRAM shortages driven by AI demand. |
Semiconductors Memory DRAM Technology Nvidia |
GoldGold experienced its best annual return since 1979 driven by seemingly insatiable appetite, entering bubble territory. The precious metal drove the Small Resources index to a 45.3% increase in the December half. |
Gold Precious Metals Bubble Resources | |
| 2025 Q2 |
ValuationAI-related companies continue to command premium valuations while other sectors remain reasonably priced. This valuation divide continues to guide investment activity, with the fund remaining wary of companies trading at exceedingly high valuations that imply exceptional multi-year earnings growth. |
Premium Divide Discipline Stretched Reasonable |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 24, 2025 | Fund Letters | Krishna Mohanraj | TSM | Taiwan Semiconductor Manufacturing Co. Ltd. | Information Technology | Semiconductors | Bull | NYSE | AI, Foundry, growth, HPC, leadership, manufacturing, semiconductors | Login |
| Oct 24, 2025 | Fund Letters | Krishna Mohanraj | FRAN | FNV | Industrials | Materials | — | Options Clearing Corporation | Franco-nevada’s capital-light royalty model and balance sheet strength provide leveraged upside to higher gold prices. with 80%+ ebitda margins and defensive cash flow, It remains a strategic inflation hedge. | Login |
| Oct 24, 2025 | Fund Letters | Krishna Mohanraj | HIK | Hikma Pharmaceuticals | Health Care | Pharmaceuticals | Bull | NYSE | Emerging markets, growth, Injectables, Margins, pharmaceuticals, valuation | Login |
| Jul 27, 2025 | Fund Letters | Krishna Mohanraj | HAL IN | Hindustan Aeronautics Limited | Energy | Aerospace & Defense | Bull | NYSE | Aerospace, backlog, Defense, growth, Localization | Login |
| Jan 27, 2026 | Fund Letters | Krishna Mohanraj | 000660 KS | SK hynix Inc | Information Technology | Semiconductors | Bull | New York Stock Exchange | AI, HBM, Memory, rerating, semiconductors | Login |
| TICKER | COMMENTARY |
|---|---|
| 000660.KS | SK Hynix continued its strong performance as the clear winner to date in high bandwidth memory, reporting a 62% year-over-year growth in profits in the third quarter and announcing that all of its DRAM, NAND and high bandwidth memory capacity is fully booked for 2026. SK Hynix was a top contributor over the quarter and year, with reductions made as it was among artificial intelligence-related companies that had performed well. |
| 005930.KS | Samsung was the largest beneficiary as the shortage in its key memory products, particularly DRAM, has led to substantial price increases. The shares have re-rated to around 1.7x price-to-book, while still trading at less than 10x forward earnings. Given this re-rating, we have been reducing the position during the quarter. |
| BABA | Alibaba (+90% total return in local currency to the point of sale). The share price strength occurred despite a deterioration in some of the fundamentals: earnings declined by approximately 75% in the most recent quarter, while capital expenditure has increased fourfold over the past two years as the company invests heavily to drive growth in its cloud business. Our original investment case was anchored in the strength of the free cash flow generation of the core business. As this thesis has weakened, we exited the position during the quarter. |
| EXO.MI | Exor (-18%) was one of the largest negative contributors to performance. Exor is emblematic of the type of opportunity we are increasingly finding in today's markets: a well-run holding company trading at a material discount to fair value, with exposure to industries that are firmly out of the headlines. The shares are trading at €72, the sum of the parts implies a fair value of over 100% above the current price. |
| ICON | Global contract research organization ICON — offers end-to-end clinical services across pharma, biotech and medical devices. We expect continued industry outsourcing to support growth and market share gains versus smaller providers. |
| NWG.L | Retail and commercial bank NatWest maintains a strong domestic market share offering wealth management and corporate banking services as well as a growing digital franchise. Results ahead of consensus on the back of upgraded guidance going in to the new year saw the share price surge throughout the final quarter. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
