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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"In Q2 2025, the Diamond Hill Small-Mid Cap Strategy achieved positive absolute returns but lagged its benchmark, utilizing temporary market volatility to establish six new deeply discounted positions."
The Diamond Hill Small-Mid Cap Strategy’s Q2 2025 investor letter outlines a volatile but ultimately positive quarter for equity markets, recovering from an April selloff induced by President Trump's tariff announcements. US stocks rallied approximately 11% overall, with growth outperforming value across cap sizes. Within the strategy, portfolio returns were positive on an absolute basis but trailed the Russell 2500 Index due to technology and consumer staples headwinds. Key contributors included Red Rock Resorts, WESCO, Regal Rexnord, Mr. Cooper Group (benefiting from a Rocket Companies acquisition announcement), and Gates Industrial. Conversely, bottom contributors included Insperity, Civitas Resources, ICON, Post Holdings, and Ashland. The manager exited Insperity due to margin pressures and long-term AI disruption risks, while also selling Vail Resorts to fund superior risk-reward profiles. New positions were initiated in Generac Holdings, Alaska Air Group, Knife River Corporation, Taseko Mines, Century Communities, and FTI Consulting at compelling valuations. Looking forward, the manager remains cautious about weakening consumer trends but is confident that a disciplined focus on intrinsic value will continue to deliver long-term outperformance.
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