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 Red Rock Resorts, Inc. (NASDAQ:RRR). Headquartered in Las Vegas, Nevada, Red Rock Resorts, Inc. (NASDAQ:RRR) develops and operates casino and entertainment properties. One-month return of Red Rock Resorts, Inc. (NASDAQ:RRR) was 10.81%, and its shares lost 11.07% of their value over the last 52 weeks. On February 12, 2025, Red Rock Resorts, Inc. (NASDAQ:RRR) stock closed at $51.57 per share with a market capitalization of $5.29 billion.
Diamond Hill Small Cap Fund stated the following regarding Red Rock Resorts, Inc. (NASDAQ:RRR) in its Q4 2024 investor letter:
“Among our bottom Q4 contributors were Red Rock Resorts, Inc. (NASDAQ:RRR) and Ashland. Red Rock Resorts, a casino operator controlling over half the Las Vegas locals market, was pressured amid weaker locals demand combined with competitive wage increases, which weighed on operating margins. The company’s plans for capital improvements in 2025 combined with macroeconomic concerns have also contributed to weaker sentiment. However, our long-term view is intact, and we find the investment opportunity ahead of the company even more compelling at the currently lower valuation.”
A picturesque sunset view of the Graton Resort & Casino, with patrons gambling in the background.
Red Rock Resorts, Inc. (NASDAQ:RRR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Red Rock Resorts, Inc. (NASDAQ:RRR) at the end of the third quarter which was 17 in the previous quarter. While we acknowledge the potential of Red Rock Resorts, Inc. (NASDAQ:RRR) 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.
In another article we discussed Red Rock Resorts, Inc. (NASDAQ:RRR) and shared the list of best vacation stocks to buy. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.
Disclosure: None. This article is originally published at Insider Monkey.