The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
Diamond Hill's Large Cap Fund returned 3.35% in Q2 2026, underperforming the Russell 1000 Value Index's 13.87% return, with nearly all underperformance attributable to the information technology sector. The Fund's lack of exposure to AI beneficiaries like Micron, which alone accounted for 25% of relative underperformance, was the primary detractor as the sector returned 81% driven by AI-related capital expenditures. Software holdings also detracted as AI uncertainty weighs on the industry, though the manager believes current valuations for Salesforce, Adobe, and Microsoft embed excessive pessimism. Bright spots included managed care holdings Humana and Elevance, which benefited from better-than-expected Medicare rate increases, and Nucor, which gained from data center-driven steel demand and supportive trade policy. Energy was the worst-performing sector at -14% following an Iran peace agreement. The manager believes above-average market valuations will lead to below-average returns over five years but remains confident in generating alpha through bottom-up stock selection, adding three new positions while eliminating five others to deploy capital to more attractive opportunities.
Diamond Hill employs a bottom-up value approach focused on identifying mispriced securities despite elevated market valuations, with confidence that active management can generate better-than-market returns over the next five years.
The manager believes above-average equity market valuations are likely to lead to below-average returns over the next five years. However, they continue to find attractive opportunities on a bottom-up basis and are confident they can achieve better-than-market returns over the next five years through active portfolio management. The tone is cautiously optimistic, acknowledging elevated market valuations while expressing confidence in their ability to generate alpha through stock selection.
As of Jul 17, 2026
The Small-Mid Cap Strategy targets companies with market capitalizations between $500 million and $10 billion at time of purchase, maintaining a concentrated portfolio of 64 equity holdings as of December 31, 2025. With $1.374 billion in assets under management, the strategy demonstrates high conviction through a 99% active share and significant differentiation from benchmark indices. The approach has generated competitive long-term returns since inception in 2005, with 9.33% gross annualized returns compared to 8.97% for the Russell 2500 Index. The strategy is available both as separate accounts and through mutual fund vehicles (DHMAX, DHMIX, DHMYX).
Lead Portfolio Manager
Chuck Bath
Managing Partner
Moderate Conviction Bullish
Market Conviction
The letter names 18 specific holdings with substantive commentary, including detailed discussion of position additions and eliminations. The manager provides clear rationale for each holding and explicitly states confidence in achieving better-than-market returns through active management. However, this is a large-cap value fund with diversified exposure across multiple sectors, not a concentrated portfolio. The manager uses some hedged language (we believe, monitoring risks) and presents multiple scenarios around AI impact. The 0.62 score reflects moderate-to-high conviction: clear thesis per holding with named positions and sizing context, but within a diversified framework with acknowledged uncertainties.
Growth Outlook
Market outlook remains moderate conviction: Diamond Hill Large Cap Fund underperformed the Russell 1000 Value Index in Q4 2025 due to its disciplined lack of exposure to AI growth exuberance, choosing instead to focus on out...
Risk Appetite
Risk appetite posture is moderate conviction: Diamond Hill Large Cap Fund underperformed the Russell 1000 Value Index in Q4 2025 due to its disciplined lack of exposure to AI growth exuberance, choosing instead to focus on out...
Capital Deployment
The Fund added three new positions (Humana, Elevance Health, FedEx Freight) and eliminated five positions (Wix.com, General Motors, Regal Rexnord, Starbucks, SS&C Technologies). This represents capital rotation rather than net deployment or de-risking, as proceeds from sales were used to fund new purchases. No cash level changes are disclosed. The +0.05 score reflects rotation activity with no evidence of net cash deployment or accumulation, placing it in the neutral zone with a slight positive tilt due to the willingness to add new names.
Forward Guidance
Forward guidance signal: Diamond Hill Large Cap Fund underperformed the Russell 1000 Value Index in Q4 2025 due to its disciplined lack of exposure to AI growth exuberance, choosing instead to focus on out...
Language Signal
The letter contains a mix of directional language. Bearish/cautious language includes: above-average valuations, below-average returns expected, AI uncertainty weighing on software, meaningful headwind, concerns, risks being monitored. Bullish language includes: attractive opportunities, confident, strong contributors, rebound, gaining traction, well positioned. The bearish language around market valuations and AI disruption is slightly more prominent than the bullish language around specific holdings, resulting in a mildly negative -0.10 score reflecting near-balance with a slight tilt toward caution.
Perceived Risk
Perceived risk level is evaluated as above average conviction. Diamond Hill Large Cap Fund underperformed the Russell 1000 Value Index in Q4 2025 due to its disciplined lack of exposure to AI growth exuberance, choosing instead to focus on out...
Opportunity Density
The manager explicitly states they continue to find attractive opportunities on a bottom-up basis despite elevated market valuations. The Fund added three new positions and the letter discusses multiple holdings with positive outlooks (managed care, steel, consumer discretionary). However, the emphasis on selectivity and the acknowledgment that market valuations are above average suggests the opportunity set requires careful screening rather than being broadly abundant. The 0.60 score reflects selective opportunities in defined areas with the manager seeing a meaningful number of good ideas but characterizing the environment as requiring active management and selectivity.
Time Horizon
The manager explicitly references a five-year outlook multiple times, stating that above-average valuations are likely to lead to below-average returns over the next five years and expressing confidence in achieving better-than-market returns over the next five years. This indicates a multi-year investment horizon. However, the letter also discusses near-term catalysts like Medicare rate increases and quarterly results, suggesting some catalyst dependency within the multi-year framework. The 0.68 score reflects a multi-year thesis (2-5 years) with some milestone monitoring, typical of a public equities fund with quarterly reporting but a stated long-term orientation.
Top Conviction Themes
Key Catalysts
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