• Committed to the Graham-Buffett investment philosophy, with goals (over 5-year rolling periods) to outperform benchmarks and our peers, and achieve absolute returns sufficient for risk of asset class.
• Driven by our conviction to create lasting value for clients and shareholders.
• Motivated through ownership of Diamond Hill funds and company stock.

• Treat every investment as a partial ownership interest in that company
• Always invest with a margin of safety to ensure the protection of capital, as well as the return on capital
• Possess a long-term investment temperament
• Recognize that market price and intrinsic value tend to converge over a reasonable period of time

Our fundamental equity principles

Valuation

• Every share of stock has an intrinsic value that is independent of its current stock market price.
  
• At any point in time, the stock market price may be either significantly higher or lower than intrinsic value.
  
• Over short periods of time, as evidenced by extreme stock market volatility, the stock market price is heavily influenced by the emotions of market participants, which are far more difficult to predict than intrinsic value. While stock market prices may experience extreme fluctuations on a particular day, we believe intrinsic value is far less volatile.
  
• Over sufficiently long periods of time, five years and longer, the stock market price tends to revert to intrinsic value.
  

Calculating Intrinsic Value Estimate

• We believe that we can determine a reasonable approximation of that intrinsic value in some cases.
  
• That value can be determined if we have a reasonable basis for projecting the future cash flows of a business and use an appropriate discount rate.
  
• In estimating intrinsic value, we use an interdisciplinary approach. Not only do we perform financial modeling including discounted cash flow, private market value, and leveraged buyout analyses, we draw from other areas we believe are relevant to our investment decision-making. These include economics, statistics and probability theory, politics, psychology, and consumer behavior.
  
• In short, we do not want to exclude from our thinking anything that can help us forecast future cash flows, our most important as well as most difficult job.
  
• The Diamond Hill investment process continually compares market price to our estimate of intrinsic value, which is updated over time as new information arises.
  

Suitable Investments

• We only invest in a business when the stock market price is lower than our conservative assessment of per share intrinsic value (or at a premium for short positions).
  
• We concentrate our investments in businesses whose per share intrinsic value is likely to grow. To achieve this, we assess the underlying economics of the businesses in which we invest and the industries and markets in which they participate. We seek to invest in businesses that possess a competitive advantage and significant growth prospects as well as outstanding managers and employees.
  
• Every business in which we invest is "handicapped" by its price. While we would prefer to own only great businesses with superior managers, there are very few businesses that satisfy those criteria and additionally are available at attractive prices. As a result, we may invest in less attractive businesses at more than attractive prices. Depending on the price that we pay, our returns from less than ideal businesses may be even better than our returns from ideal businesses.
  

Risk & Return

• We intend to achieve our return from both the closing of the gap between our purchase price and intrinsic value and the growth in per share intrinsic value. For short positions, a growing intrinsic value may shorten the holding period.
  
• We do not define risk by price volatility. We define risk as the possibility that we are unable to obtain the return of the capital that we invest as well as a reasonable return on that capital when you need the capital for other purposes. If your time horizon is less than five years, then you should not invest that capital in the stock market.

Our fundamental strategic income principles

Yield

• Our primary goal is to generate a yield greater than the current rate of inflation without bearing undue credit or interest rate risk. However, we cannot guarantee any specific yield.

Approach

• A flexible approach allows us to invest in both investment grade and non-investment grade corporate bonds as well as in preferred securities, real estate investment trusts, master limited partnerships, and closed end funds.
  
• We can also invest in securities issued by the U.S. government and its agencies when conditions warrant.
  

Total Return

• We balance our income objective with a focus on total return. Over the next five years, our objective is to earn equity-like returns in the income markets with lower year-to-year volatility and more importantly, a much lower risk of permanent loss of capital.

• Our investment discipline is to assess the economics of the underlying business, its management, and the price that must be paid to own a piece of it. We seek to concentrate our investments in businesses that are available at prices below intrinsic value (at a premium for short positions) and are managed or controlled by trustworthy and capable people. Benjamin Graham pioneered this discipline during the 1930s and many others have practiced it with great success ever since, most notably Warren Buffett.
  
• We will communicate with our clients about our investment performance in a manner that will allow them to properly assess whether we are deserving of their trust.
  
• Our investment team will be comprised of people with integrity, sound experience and education, in combination with a strong work ethic and independence of thought. Especially important is that each possesses the highest level of character, business ethics and professionalism.
  
• Our employees will enjoy a working environment that supports professional and personal growth, thereby enhancing employee satisfaction, the productivity of the firm and the experience of our clients.
  
• "Invest With Us" means we will invest the capital you entrust to us with the same care that we invest our own capital. To this end, Diamond Hill employees and affiliates are significant investors in the same portfolios in which our clients invest and are collectively the largest shareholders in the Diamond Hill Funds. In addition, all Diamond Hill employees are subject to a Code of Ethics, which states that all personal investments must be made in a Diamond Hill fund, unless approved by our Chief Compliance Officer.