| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 7.9% | 3.7% | 13.5% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 13.5% | 10.6% | 9.9% | -13.1% | 31.5% | -1.7% |
Diamond Hill's Mid Cap Strategy returned 3.65% net in Q4 2025, outperforming the Russell Midcap Index's 0.16% return, driven by strong stock selection in industrials and materials. Key contributors included Ciena, benefiting from AI and hyperscaler demand, WESCO International with expanding data center business, and Huntington Ingalls Industries capitalizing on defense spending. The portfolio positioning has become incrementally more defensive given elevated market valuations near all-time highs, with managers favoring stocks with less debt and cyclicality. Healthcare and industrials remain preferred hunting grounds for opportunities. The team exited positions in Civitas Resources, Lear Corp, and Check Point Software while initiating positions in Wix.com, Westlake Corp, General Mills, and Zoetis. AI-related spending continued driving market performance, though December saw increased investor scrutiny around AI developments and bubble concerns. The managers remain cautious about ongoing market uncertainty while maintaining focus on intrinsic value-driven investments in their target market capitalization range.
Diamond Hill's mid-cap strategy focuses on investing in medium market capitalization companies selling for less than their estimate of intrinsic value, with current emphasis on healthcare and industrials while maintaining defensive positioning amid elevated market valuations.
The managers remain cautious of elevated valuations in equity markets and believe the portfolio is well positioned for ongoing levels of heightened uncertainty going forward. They continue to find significant opportunities in healthcare and industrials while maintaining an incrementally more defensive posture.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 27 2026 | 2025 Q4 | CHKP, CIEN, CIVI, CUBE, GIS, HII, LEA, POST, VRSN, WCC, WIX, WLK, ZTS | AI, defense, healthcare, industrials, materials, mid cap, technology, value | - | AI-related spending continued to be a primary driver in equity markets throughout 2025, with many top-performing portfolio positions benefiting from ongoing AI-spending buildout across industrials,… |
| Oct 24 2025 | 2025 Q3 | AIG, COO, EQH, GDDY, KMX, RRR, RVTY, TTC, WCC | AI, Consumer Demand, industrials, Mid Caps, valuation |
CIEN WCC HII |
The fund notes that AI enthusiasm is inflating valuations across mid-cap equities while creating opportunities in overlooked industrial and consumer names. It highlights investments in… |
| Jul 27 2025 | 2025 Q2 | ALK, ASH, COOP, FCN, ICLR, POST, RRR, RRX, TFX, WCC | fundamentals, margin expansion, Mid Caps, self-help, valuation |
RRR WCC RRX ICLR ASH ALK FCN |
The letter emphasizes mid-cap companies with strong fundamentals and mispriced growth prospects. Operational improvement, margin expansion, and self-help initiatives are key sources of value creation.… |
| Apr 24 2025 | 2025 Q1 | AIG, ASH, COOP, ILMN, MLM, RRX, TRU, VTR, WCC | - | - | - |
| Dec 31 2024 | 2024 Q4 | ASH, CUBE, ICLR, LPLA, RRR, SOLV, TDY, WCC | - | - | - |
| Sep 30 2024 | 2024 Q3 | ASH, CUBE, HII, HUM, LANC, NVR, PH, RRX | - | - | - |
| Jul 26 2024 | 2024 Q2 | BSX, CIVI, GDDY, HUM, LH, NXPI, RRR, RRX, SYY, UDR, VRSN, WCC | - | - | - |
| Apr 15 2024 | 2024 Q1 | ADM, AIG, FANG, JCI, PH, POST, RRR, RRX, SBAC, WCC | - | - | - |
| Jan 2 2024 | 2023 Q4 | BWA, CIEN, CTRA, CUBE, FBIN, GDDY, NSP, NVST, PH, RRR, ST, VFC, WBS, WCC | - | - | - |
| Sep 30 2023 | 2023 Q3 | AIG, ENOV, LHX, MAA, RRR, WCC | - | - | - |
| Jul 25 2023 | 2023 Q2 | ASH, CIEN, ENOV, FERG, LEA, PH, SBAC, ST, UGJ, WCC | - | - | - |
| Mar 31 2023 | 2023 Q1 | ALL, ARW, ESAB, FIS, FRC, SF, SIVBQ | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
Data CentersSupply constraints curtailing infrastructure buildout rate, but compute capacity is being used immediately upon coming online. This differs from dot-com bubble when dark fiber was installed ahead of need. Labor, power and land shortages creating bottlenecks. |
Supply Constraints Utilization Bottlenecks Infrastructure | |
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 | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
ConsumerThe consumer segment includes DJL Petfoods (pet food ingredients distributor) and TSDC Wholesale (food and grocery wholesale). DJL exemplifies RDCP 2.0 characteristics as an asset-light but infrastructure-critical business with long-standing customer relationships, exceptional retention rates, and exposure to growing pet ownership and premiumisation trends. These businesses benefit from structural advantages and recurring revenue streams. |
Pet Care Food Distribution Consumer Staples Wholesale Distribution | |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management | |
| 2025 Q2 |
MidCaps |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 27, 2025 | Fund Letters | Chris Welch | WCC | WESCO International, Inc. | Industrials | Capital Goods | Bull | NYSE | Distribution, Electrification, infrastructure, Margins, scale | Login |
| Jul 27, 2025 | Fund Letters | Chris Welch | RRX | Regal Rexnord Corporation | Industrials | Industrial Machinery | Bull | NYSE | Automation, deleveraging, efficiency, Industrials, synergies | Login |
| Jul 27, 2025 | Fund Letters | Chris Welch | ICLR | ICON plc | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Bookings, growth, Outsourcing, Pipelines, Trials | Login |
| Jul 27, 2025 | Fund Letters | Chris Welch | ASH | Ashland Inc. | Materials | Specialty Chemicals | Bull | NYSE | Chemicals, construction, Sentiment, specialty, valuation | Login |
| Jul 27, 2025 | Fund Letters | Chris Welch | ALK | Alaska Air Group, Inc. | Industrials | Airlines | Bull | NYSE | Airlines, Capacity, Cyclicality, Demand, valuation | Login |
| Jul 27, 2025 | Fund Letters | Chris Welch | FCN | FTI Consulting, Inc. | Industrials | Research & Consulting Services | Bull | NYSE | Advisory, cashflow, Disputes, diversification, restructuring | Login |
| Oct 24, 2025 | Fund Letters | Chris Welch | CIEN | Ciena Corporation | Information Technology | Communications Equipment | Bull | NYSE | AI, Data, growth, hyperscalers, infrastructure, Margins, Networking | Login |
| Oct 24, 2025 | Fund Letters | Chris Welch | WCC | WESCO International | Industrials | Electrical Components & Equipment | Bull | NYSE | data centers, Distribution, Electrification, growth, infrastructure, Margins, utilities | Login |
| Oct 24, 2025 | Fund Letters | Chris Welch | HII | Huntington Ingalls Industries | Industrials | Aerospace & Defense | Bull | NYSE | backlog, cashflow, Defense, Labor, Margins, Navy, Shipbuilding | Login |
| Jul 27, 2025 | Fund Letters | Chris Welch | RRR | Red Rock Resorts, Inc. | Consumer Discretionary | Hotels, Resorts & Cruise Lines | Bull | NASDAQ | cashflow, consumer, Gaming, leverage, Tourism | Login |
| TICKER | COMMENTARY |
|---|---|
| CHKP | Shares of cybersecurity software firm Check Point Software Technologies and food manufacturer Marzetti were sold as prices approached our estimate of intrinsic value. |
| CIEN | Ciena, a networking systems company, saw shares increase meaningfully during the quarter amid optimism around hyperscaler and AI-related demand. The company has also benefited from growing cloud spending, which has supported its pluggables and data interconnect business. |
| CIVI | We exited our position in oil and gas producer Civitas Resources after the company announced an all-stock acquisition by SM Energy. While both companies trade at a discount to our estimates of intrinsic value, there is significant uncertainty around the long-term prospects for the combined entity given the lack of operational overlap. |
| CUBE | Shares of self-storage REIT CubeSmart declined as the slowdown in existing home sales persisted, leading to lower occupancy for storage units. While this weaker backdrop will likely persist in 2026, we believe the company remains well positioned long term given its economies of scale, brand awareness and the industry's high barriers to entry. |
| GIS | General Mills, a food and pet nutrition company with leading positions across several product categories, faced near-term volume pressure as consumer behavior shifted following significant post-pandemic price increases. The company has reinvested productivity savings into pricing and advertising, actions aimed at supporting the long-term health of its brands. |
| HII | Huntington Ingalls Industries, the largest shipbuilder for the US Navy, outperformed during the quarter after reporting strong Q3 results and raising full-year guidance. Shares also benefited after the award of a new frigate contract and discussion of a potential Trump-class battleship, both of which were viewed as meaningful opportunities. Performance was further supported by improving execution as recent labor challenges eased. |
| LEA | We exited our position in automotive supplier Lear Corp. given shifts in electric vehicle demand and slowing growth at some automakers. While the company remains a stable business in the auto industry, its e-systems segment has struggled to grow margins amid changing hybrid and electric vehicle production schedules, and increased exposure to Chinese original equipment manufacturers has not been enough to materially lift volumes. |
| POST | Packaged food company Post Holdings faced pressure in Q4 as a tough food staples environment and weaker consumer sentiment hurt volumes. Higher price sensitivity and heavy promotional activity also limited margin growth. |
| VRSN | Shares of internet infrastructure provider VeriSign declined after Berkshire Hathaway reduced its stake in the company earlier in 2025, a move driven by regulatory considerations rather than company fundamentals. Despite near-term pressure, the company continues to benefit from high customer switching costs, proprietary technology, US government support and disciplined capital allocation. |
| WCC | Electrical products distributor WESCO International outperformed in Q4 after reporting solid Q3 results and raising 2025 guidance. Better-than-expected organic growth was driven by its rapidly expanding data center business, which reached nearly 20% of total revenue. |
| WIX | Wix.com Ltd. is a leading provider of cloud-based web-development platform for micro-businesses. Shares of Wix declined 41.5% during the fourth quarter and ended the year down 51.9% due to a quarterly earnings report that emphasized greater-than-expected investment behind their new acquisition, the vibe-coding startup, Base44. |
| WLK | Westlake Corp., a low-cost chemicals producer and emerging supplier of building products, is managing supply-side headwinds in its commodity businesses by adjusting capacity. As the housing market recovers from a prolonged downturn in new construction, we believe both segments of the business should benefit over the long term. |
| ZTS | ZTS: $6B authorized August 2024; $1.5B used as of September 2025 |
| 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 |
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