Diamond Hill Capital, an investment management company, released its “Small Cap Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. In Q4, markets rose unevenly, ending another positive year for markets. Stocks rose generally after the US election, but several lost most or all of their gains before the end of the year. Against this backdrop, the strategy outperformed the Russell 2000 Index in Q4 and for the full year. Relative strength in Q4 was concentrated among industrials holdings outperforming benchmark peers by a wide margin. Additionally, consumer staples and energy holdings also provided relative tailwinds. On the other hand, consumer discretionary holdings were the main cause of strategy’s relative weakness. Even though holdings were quite favorable on an absolute basis, underweight to the technology sector was another headwind in Q4. The strategy returned 0.93% in Q4 and 13.22% in 2024, compared to 0.33% and 11.54% return for Russell 2000 Index for the same periods. For more information on the fund’s top picks in 2024, please check its top five holdings.
In its fourth quarter 2024 investor letter, Diamond Hill Small Cap Fund emphasized stocks such as Graham Corporation (NYSE:GHM). Graham Corporation (NYSE:GHM) designs and manufactures mission critical fluid, power, heat transfer, and vacuum technologies for the defense, space, energy. One-month return of Graham Corporation (NYSE:GHM) was -14.40%, and its shares gained 51.96% of their value over the last 52 weeks. On February 12, 2025, Graham Corporation (NYSE:GHM) stock closed at $37.64 per share with a market capitalization of $410.385 million.
Diamond Hill Small Cap Fund stated the following regarding Graham Corporation (NYSE:GHM) in its Q4 2024 investor letter:
“Other top Q4 contributors included Centrus Energy, Graham Corporation (NYSE:GHM) and Cal-Maine Foods. Graham Corp, which designs and manufactures fluid, power, heat transfer and vacuum technologies to a variety of clients, is executing well amid ongoing demand from the US Navy. With a solid backlog and stable incoming defense orders, we believe the outlook remains constructive.”
An engineer working in a high-tech lab, calibrating parts for a liquid ring pump.
Graham Corporation (NYSE:GHM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 9 hedge fund portfolios held Graham Corporation (NYSE:GHM) at the end of the third quarter which was 10 in the previous quarter. Graham Corporation’s (NYSE:GHM) sales for the fiscal third quarter of 2025 reached $47 million, up 7.3% from last year. This increase was fueled by growth in the chemical, petrochemical, space, defense, and commercial aftermarket sectors. While we acknowledge the potential of Graham Corporation (NYSE:GHM) 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 initiated a position in Graham Corporation (NYSE:GHM) during the fourth quarter of 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.