First Advantage Corporation (FA) Outperformed Despite Challenges

Diamond Hill Capital, an investment management company, released its “Small Cap Fund” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In Q3, markets contributed to strong year-to-date gains, though not without some volatility. As shown by the Russell 2000 Index, small-cap equities increased by 9%, while the broad market Russell 3000 Index increased by slightly more than 6%. Against this backdrop, the strategy trailed the index and returned 8.43% in the quarter compared to 9.27% for the Russell 2000 Index. For more information on the fund’s top picks in 2024, please check its top five holdings.

Diamond Hill Small Cap Fund highlighted stocks like First Advantage Corporation (NASDAQ:FA), in the third quarter 2024 investor letter. First Advantage Corporation (NASDAQ:FA) is a global provider of employment background screening, identity, and verification solutions. The one-month return of First Advantage Corporation (NASDAQ:FA) was -5.95%, and its shares gained 40.19% of their value over the last 52 weeks.  On October 30, 2024, First Advantage Corporation (NASDAQ:FA) stock closed at $18.70 per share with a market capitalization of $2.689 billion.

Diamond Hill Small Cap Fund stated the following regarding First Advantage Corporation (NASDAQ:FA) in its Q3 2024 investor letter:

“On an individual holdings basis, among our top Q3 contributors were Live Oak Bancshares, First Advantage Corporation (NASDAQ:FA) and United States Lime & Minerals. First Advantage is one of the largest pre- and post-hiring background check companies. Over the past couple of decades, the background check industry has increasingly consolidated around a few large companies with scale advantages — including First Advantage — though it remains reasonably fragmented, introducing opportunities for leaders to take share over time. First Advantage’s shares outperformed in Q3 against challenging macroeconomic and labor backdrops, which we think is a testament to the company’s beneficial business mix, share gains and quality management team.”

An employee of the company using the latest technology solutions on their laptop.

First Advantage Corporation (NASDAQ:FA) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 16 hedge fund portfolios held First Advantage Corporation (NASDAQ:FA) at the end of the second quarter which was 14 in the previous quarter. While we acknowledge the potential of First Advantage Corporation (NASDAQ:FA) as an investment, 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 as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

Diamond Hill Small Cap Fund added First Advantage Corporation (NASDAQ:FA) to its portfolio during Q2 2022. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.