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 Abbott Laboratories (NYSE:ABT) 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).\
An operating room with a doctor monitoring a patient’s vital signs during surgery with a medical device.
Abbott Laboratories (NYSE:ABT)
Diamond Hill Capital’s Stake Value: $741.04 million
Number of Hedge Fund Holders: 66
Abbott Laboratories (NYSE:ABT) is engaged in discovering, developing, manufacturing, and selling healthcare products worldwide. Barclays upped the company’s price objective to $158, maintaining an “Overweight” rating, after the management’s improved financial outlook and revised earnings estimates. The company expects FY 2025 adjusted operating margin to be between 23.5% – 24.0% of sales, which reflects an increase of 150 basis points at the midpoint compared to 2024. Abbott Laboratories (NYSE:ABT) expects FY 2025 adjusted diluted EPS of $5.05 to $5.25, demonstrating a double-digit growth at the midpoint.
During 2024, the company announced over 15 new growth opportunities coming from its highly productive R&D pipeline. These consist of the combination of new product approvals as well as new treatment indications. Also, the medical device market offers strong growth opportunities for Abbott Laboratories (NYSE:ABT). With the aging of the global population and chronic diseases becoming more prevalent, the demand for advanced medical devices is anticipated to increase. Abbott Laboratories (NYSE:ABT)’s focus on developing cutting-edge technologies places it well to capitalize on such trends. Notably, worldwide medical devices sale rose 13.7% YoY in Q4 2024 on a reported basis and 14.0% on an organic basis, including double-digit growth in both the US and internationally.
Overall, ABT ranks 2nd on our list of top 10 stock picks of Diamond Hill Capital. While we acknowledge the potential of ABT 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 ABT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
