We recently published a list of Diamond Hill Capital Stock Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Berkshire Hathaway Inc. (NYSE:BRK-A) stands against other top 10 stock picks of Diamond Hill Capital.
Heather Brilliant, CFA, serves as CEO for Diamond Hill Capital and joined the firm in 2019, bringing over 20 years of domestic and international investment industry experience to this role. Most recently, she was the CEO of Americas with First State Investments. Before that role, she dedicated ~14 years with Morningstar where she was Global Head of Equity & Credit Research before advancing to CEO of Morningstar Australasia. Established in 1997, Diamond Hill Capital Management is a distinguished hedge fund manager based in Ohio.
Investment Philosophy & Process
Diamond Hill Capital has consistently applied an intrinsic value investment philosophy since its founding. The investment management firm focuses on buying ownership stakes in businesses that trade for less than what they are worth and then wait for that value to be realized over time. Under its intrinsic value philosophy, the firm treats every investment as a partial ownership interest in that organization and invests with a margin of safety. Apart from these, the firm possesses a long-term temperament (five years or longer) and believes that market price and intrinsic value will converge within an appropriate time frame. As of February 28, the investment management firm had assets under management of ~$30.9 billion.
Of the total AUM, ~$17.8 billion is allocated to large-cap strategy. Notably, around 23.1% is invested in the financial sector, while the industrial sector made up ~17.5%, as of December 31.
Diamond Hill Capital’s Equity Market Outlook
While several investors remain optimistic about the possibly more accommodative regulatory environment and tax cuts, Diamond Hill Capital believes the fact that the majority of the stocks aside from mega-cap technology companies gave back most of their Q4 2024 gains, which hints about optimism being outweighed by worries related to the potential for policy proposals in fields such as tariffs, taxes, and immigration to spur inflation. Moving forward, the investment management firm plans to assess government policies’ potential impacts, which can vary widely throughout businesses and industries. The company plans to seek attractive opportunities that trade at valuations it finds compelling relative to its estimates of intrinsic value and with the potential to deliver above-average returns.
With this in mind, let us now have a look at the Diamond Hill Capital Stock Portfolio: Top 10 Stock Picks.
Our Methodology
To list the Top 10 Stock Picks of Diamond Hill Capital, we selected the top 10 stocks in Diamond Hill Capital’s portfolio as per its Q4 2024 13F filing. We settled on the hedge fund’s 10 biggest holdings. Finally, we ranked the stocks in ascending order based on the value of Diamond Hill Capital’s equity stakes. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Warren Buffett of Berkshire Hathaway
Berkshire Hathaway Inc. (NYSE:BRK-A)
Diamond Hill Capital’s Stake Value: $710.93 million
Number of Hedge Fund Holders: 131
Wall Street analysts Meyer Shields of KBW and Brian Meredith of UBS have increased their price targets on Berkshire Hathaway Inc. (NYSE:BRK-A)’s stock after it delivered strong Q4 2024 results. Meredith reiterated a “Buy” rating, increasing the price target to $836,135 from $803,444, while Shields boosted the target price to $775,000 from $750,000, maintaining a “Market Perform” rating. Berkshire Hathaway Inc. (NYSE:BRK-A) stated that its operating profit -encompassing earnings from its wholly owned businesses — increased to $14.5 billion during Q4 2024. That was aided by a strong increase in insurance underwriting.
While Berkshire Hathaway Inc. (NYSE:BRK-A)’s financial results were healthy, it was the company’s strong cash pile of $334.2 billion that turned heads on Wall Street. However, in the annual letter, Mr. Buffett said that he is struggling to find investments. The legendary investor comforted its shareholders by saying that Berkshire Hathaway Inc. (NYSE:BRK-A) will forever deploy a substantial majority of money in equities. That being said, a small but important exception to its U.S.-based focus is the growing investment in Japan. Morningstar believes that the company’s strong balance sheet and liquidity are some of its competitive advantages. Its insurance operations remain well overcapitalized, possessing increased levels of equity, fixed income, and cash relative to its reserves.
Overall, BRK-A ranks 3rd on our list of top 10 stock picks of Diamond Hill Capital. While we acknowledge the potential of BRK-A as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than BRK-A but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
