Diamond Hill Small Cap Fund Q4 2024 Commentary

2025-03-04 08:55:00 ET

Summary

• Markets rose unevenly in Q4, with the Russell 3000 up 2.6% and the Russell 2000 up 0.3%, driven by tech and consumer staples.
• Our portfolio outperformed the Russell 2000, with strong gains in industrials, consumer staples, and energy, despite headwinds in consumer discretionary and tech.
• New positions include FTAI Infrastructure, Mesa Laboratories, Cimpress, and Curbline Properties, funded by exiting Gates Industrial, Sanmina Corporation, and WNS Holdings.
• We remain committed to disciplined stock selection, focusing on undervalued, resilient companies to achieve above-average returns over the next five years.

Market Commentary

Markets rose unevenly in Q4, concluding another nicely positive year for markets. Following the US election, stocks broadly gained, but some gave most or all of those gains back through the end of the year. For the quarter, the broad Russell 3000 rose +2.6%, bringing calendar-year returns to roughly +24%. The Russell 2000 Index added more modestly (+0.3%) to a solid calendar-year return of +11.5%. From a style perspective, value underperformed growth across the cap spectrum in Q4, adding to the full-year divergence between growth and value stocks. In Q4, the Russell 2000 Value Index declined -1.1% while its growth counterpart rose +1.7%....

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