| 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 |
BankingEuropean banking sector produced strong outperformance led by Bank of Ireland, Lloyds Banking Group, and CaixaBank. Sector returns supported by interest rate stabilization and yield curve steepening. The market is transitioning toward improving organic loan growth after fifteen years of stagnant credit activity. |
Regional Banks Money Center Banks European Banks |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
| 2025 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
GoldGold reached record highs above $5,000 per ounce but silver's dramatic rally has triggered a sell signal. Historical pattern suggests both metals may enter 2-3 year correction period. Central bank demand remained strong at 863 tonnes for 2025, though China purchases slowed significantly. |
Precious Central Banks ETFs Debasement | |
| 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 has solidified its leadership in high-bandwidth memory (HBM), emerging as the exclusive HBM supplier for Microsoft's in-house AI accelerator and securing roughly two-thirds of NVIDIA's anticipated HBM4 demand for its next-generation platforms at meaningfully higher price points and margins than prior generations. |
| 005930.KS | Selected technology-related companies held across several of our funds contributed for the quarter, particularly established franchises such as Samsung Electronics and Alphabet (Google). While the shares of both companies soared upward in price during the year, we believe they remain reasonably valued relative to their near-term growth prospects. |
| BABA | our Asian investments performed strongly with Alibaba and Jardine Matheson up 63% |
| EXO.MI | Decline in prices of holdings and widened discount to NAV. We have favoured Exor despite/because of the recent downturn in Ferrari shares, given the strong see-through publicly listed element of over 85% of the portfolio, allied to strong capital management. |
| 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. |
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