Diamond Hill Capital’s Top 10 Stock Picks

1. American International Group, Inc. (NYSE:AIG)

Value of Diamond Hill Capital’s 13F Position (9/30/2024): $1.0 billion

Number of Hedge Fund Shareholders (9/30/2024): 51

American International Group, Inc. (NYSE:AIG) remained Diamond Hill Capital’s top stock for the 16^th straight quarter as of the end of Q3. The fund raised its stake in the investment bank by 6% during the quarter, pushing the value of its position to just over $1 billion. Several other hedge funds grew bearish on AIG during Q3 however, as there was a 20% dip in ownership of the stock.

American International Group, Inc. (NYSE:AIG) delivered strong Q3 results, growing after-tax income per diluted share by 18% year-over-year to $1.23, beating estimates by more than 10%. Despite that performance, AIG shares traded down post earnings, in part due to lowered net interest income guidance for Q4. The insurer also guided for a 10% return on equity this year, which Wells Fargo projects will rise to 10.3% next year and 10.8% in 2026. Wells has a $76 price target and ‘Equal Weight’ rating on AIG shares.

It’s no wonder Diamond Hill loves AIG, as the stock was one of the Diamond Hill Large Cap Strategy’s top performers during the first quarter of this year, as relayed in the fund’s Q1 2024 investor letter:

“Among our top individual contributors in Q1 were American International Group, Inc. (NYSE:AIG) and HCA Healthcare. Property and casualty insurance company AIG made more progress selling its stake in life insurer Corebridge in the quarter while repositioning its portfolio via several divestitures — lending support to our thesis that the high-quality management team will continue executing a turnaround in the business.”

Overall, American International Group, Inc. (NYSE:AIG) ranks first among Diamond Hill Capital’s Top 10 Stock Picks. While we acknowledge the potential of AIG, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AIG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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