Diamond Hill Capital’s Top 10 Stock Picks

6. HCA Healthcare, Inc. (NYSE:HCA)

Value of Diamond Hill Capital’s 13F Position (9/30/2024): $608 million

Number of Hedge Fund Shareholders (9/30/2024): 70

Diamond Hill and the broader hedge fund industry alike were paring back their positions in HCA Healthcare, Inc. (NYSE:HCA) during Q3 following the stock’s strong performance during the first nine months of 2024. Diamond Hill unloaded 5% of its HCA stake during Q3 to leave it with just under 1.5 million shares. The stock has dipped by 22.6% in Q4, giving back more than half of its year-to-date gains.

HCA Healthcare, Inc. (NYSE:HCA) operates over 2,000 healthcare facilities and has gradually increased its market share in the U.S. over the past decade. That figure currently stands at 27%, which the company plans to grow to 29% by the end of the decade. The company recently backed its FY24 revenue guidance of $69.75 billion to $71.75 billion, as well as its adjusted EPS view of between $21.60 and $22.80 in earnings, despite the disruptions caused by two major hurricanes hitting the U.S in the span of less than two weeks.

Analysts are bullish on hospitals in 2025 after a very strong year in 2024, though there is some concern surrounding Republicans sweeping into office and what effect that will have on the Affordable Care Act and enhanced exchange subsidies.

The Diamond Hill Large Cap Strategy is bullish on the improving macro fundamentals of HCA Healthcare, Inc. (NYSE:HCA), as the fund discussed in its Q1 2024 investor letter:

“Among our top individual contributors in Q1 were American International Group (AIG) and HCA Healthcare, Inc. (NYSE:HCA). Health care facilities operator HCA Healthcare benefited from a strong demand environment for hospitals in Q4, which is expected to continue into 2024 as nursing labor costs normalize and companies are able to improve margins tied to above-average physician costs. As a best-in-class operator with unique assets in favorable geographies, we believe the outlook for HCA Healthcare from here is favorable.”