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Investment Strategy

  • To estimate intrinsic value, the business must be understandable, and we must be able to reasonably forecast its cash flows. We seek businesses with sustainable competitive advantages, conservative balance sheets, and management with an ownership mentality.
  • Investments are sold when the stock price reaches our estimate of intrinsic value, our estimate of intrinsic value is revised such that there is no longer a discount to intrinsic value, a holding reaches our stated maximum position size, or to raise proceeds for a more attractive opportunity.

Team

Aaron Monroe, CFA

Portfolio Manager

Chris Welch, CFA

Portfolio Manager

Returns

Quarterly

Period and Annualized Total Returns as of 09/30/2020
Since Inception
(12/31/2000)
15-YR10-YR5-YR 3-YR 1-YR YTD 3Q20
Gross of Fees 9.51 5.65 6.72 1.55 -4.43 -14.10 -20.66 6.21
Net of Fees 8.65 4.81 5.88 0.74 -5.19 -14.80 -21.15 6.01
Russell 2000 Index 7.36 8.28 11.13 10.25 7.09 13.59 10.41 16.87
Russell 2000 Value Index 7.08 6.32 8.70 6.83 0.80 0.35 -3.05 17.82
Swipe or scroll right for more data

Past performance is not a guarantee of future results. To view a compliant presentation for all composites, click here.

Calendar Year Returns

Year Gross of Fees Net of FeesRussell 2000 IndexRussell 2000 Value Index
2019 22.92 21.96 25.52 22.39
2018 -14.03 -14.73 -11.01 -12.86
2017 12.05 11.16 14.65 7.84
2016 15.61 14.70 21.31 31.74
2015 -2.44 -3.22 -4.41 -7.47
2014 5.97 5.17 4.89 4.22
2013 41.64 40.55 38.82 34.52
2012 14.32 13.43 16.35 18.05
2011 -5.90 -6.63 -4.18 -5.50
2010 24.76 23.77 26.85 24.50

Peer Group Quartile Rankings1 as of September 30, 2020

  10-YR5-YR3-YR1-YR
Diamond Hill Percentile 89th93rd60th57th

1 This is presented as supplemental information. Source: eVestment Analytics.Ranking within eVestment U.S. Small Cap Value Equity universe based on monthly returns gross of fees. Ranking data calculated on 10/14/20 (as of 9/30/20) and is subject to change as additional firms within the category submit data.

Statistics

Portfolio Characteristics VS. Benchmark2 as of September 30, 2020

  Small Cap Composite Russell 2000 IndexRussell 2000 Value Index
Inception December 31, 2000
Status Open
Median Forward P/E 21.8x 17.3x14.7x
Median Trailing P/E 29.0x 17.7x13.9x
Weighted Average Dividend Yield 1.9% 1.6%2.9%
Median Price / Book 1.5x 1.8x1.2x
Median Price / Sales 1.4x 1.8x1.4x
Median Market Cap. $3.0B $0.6B$0.5B
Weighted Average Market Cap. $4.2B $2.3B$1.8B
Portfolio Turnover (5-Year) 20%
Active Share vs. Core / Value Benchmark 98% / 97%
Upside/Downside Capture Ratio vs. Core Benchmark 85% / 81%
Upside/Downside Capture Ratio vs. Value Benchmark 91% / 85%

This is presented as supplemental information.

Portfolio

Portfolio Guidelines

  • Typically 50–80 positions
  • Maximum position size is 7%
  • Top 10 holdings are typically greater than 25% of net assets
  • Maximum industry exposure is 20%
  • Maximum sector exposure is 30%

Market Capitalization

The portfolio typically invests in companies with a market capitalization below $3.0 billion (or, if greater, the maximum market capitalization of companies generally within the capitalization range of the Russell 2000 Index) at the time of purchase.

Top Ten Equity Holdings as of September 30, 2020

  Sector % of Net Assets
Vail Resorts, Inc. Cons. Discretionary 5.1
Sterling Bancorp Financials 4.1
Cal-Maine Foods, Inc. Consumer Staples 3.9
CubeSmart Real Estate 3.9
Red Rock Resorts, Inc. (Cl A) Cons. Discretionary 3.8
Bank OZK Financials 3.6
Live Nation Entertainment, Inc. Communication Services 3.6
WNS (Holdings) Ltd. ADR Info. Technology 3.5
Enstar Group Ltd. Financials 3.3
Colfax Corp. Industrials 2.8
Total as % of Net Assets 37.4%
Total number of equity holdings 54

This is presented as supplemental information.

Sector Allocation3 as of September 30, 2020

Small Cap Composite Russell 2000 IndexRussell 2000 Value Index
Financials 24.2 14.8 26.6
Industrials 17.5 15.2 16.8
Cons. Discretionary 16.9 13.5 13.3
Consumer Staples 10.1 3.4 3.7
Info. Technology 6.6 13.5 6.0
Real Estate 5.5 6.6 9.9
Materials 4.1 4.0 5.6
Communication Services 3.6 2.3 2.4
Utilities 3.1 3.2 5.0
Health Care 3.1 21.6 6.9
Energy 1.1 1.9 3.9
Cash & Other 4.1 0.0 0.0

This is presented as supplemental information.

Documents

Active Share: Source: FactSet. Active share measures the difference between portfolio holdings and the benchmark. The higher the active share, the greater the difference. The Russell 2000 Index is the core benchmark. The Russell 2000 Value Index is the value benchmark. Upside/Downside Capture: Source: eVestment Analytics based on monthly returns (gross of fees) from 1/1/01 – 9/30/20.

Cash & Other may include cash, treasuries, money market funds, and short duration fixed income funds.

Index data source: London Stock Exchange Group PLC. See diamond-hill.com/disclosures for a full copy of the disclaimer.