We recently published a list of Diamond Hill Capital Stock Portfolio: Top 10 Stock Picks. In this article, we are going to take a look at where Bank of America Corporation (NYSE:BAC) stands against other top 10 stock picks of Diamond Hill Capital.
Heather Brilliant, CFA, serves as CEO for Diamond Hill Capital and joined the firm in 2019, bringing over 20 years of domestic and international investment industry experience to this role. Most recently, she was the CEO of Americas with First State Investments. Before that role, she dedicated ~14 years with Morningstar where she was Global Head of Equity & Credit Research before advancing to CEO of Morningstar Australasia. Established in 1997, Diamond Hill Capital Management is a distinguished hedge fund manager based in Ohio.
Investment Philosophy & Process
Diamond Hill Capital has consistently applied an intrinsic value investment philosophy since its founding. The investment management firm focuses on buying ownership stakes in businesses that trade for less than what they are worth and then wait for that value to be realized over time. Under its intrinsic value philosophy, the firm treats every investment as a partial ownership interest in that organization and invests with a margin of safety. Apart from these, the firm possesses a long-term temperament (five years or longer) and believes that market price and intrinsic value will converge within an appropriate time frame. As of February 28, the investment management firm had assets under management of ~$30.9 billion.
Of the total AUM, ~$17.8 billion is allocated to large-cap strategy. Notably, around 23.1% is invested in the financial sector, while the industrial sector made up ~17.5%, as of December 31.
Diamond Hill Capital’s Equity Market Outlook
While several investors remain optimistic about the possibly more accommodative regulatory environment and tax cuts, Diamond Hill Capital believes the fact that the majority of the stocks aside from mega-cap technology companies gave back most of their Q4 2024 gains, which hints about optimism being outweighed by worries related to the potential for policy proposals in fields such as tariffs, taxes, and immigration to spur inflation. Moving forward, the investment management firm plans to assess government policies’ potential impacts, which can vary widely throughout businesses and industries. The company plans to seek attractive opportunities that trade at valuations it finds compelling relative to its estimates of intrinsic value and with the potential to deliver above-average returns.
With this in mind, let us now have a look at the Diamond Hill Capital Stock Portfolio: Top 10 Stock Picks.
Our Methodology
To list the Top 10 Stock Picks of Diamond Hill Capital, we selected the top 10 stocks in Diamond Hill Capital’s portfolio as per its Q4 2024 13F filing. We settled on the hedge fund’s 10 biggest holdings. Finally, we ranked the stocks in ascending order based on the value of Diamond Hill Capital’s equity stakes. Additionally, we have mentioned the hedge fund sentiment around each stock, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A professional banker providing consultation to a customer in the security of his office.
Bank of America Corporation (NYSE:BAC)
Diamond Hill Capital’s Stake Value: $677.7 million
Number of Hedge Fund Holders: 113
Baird analyst David George upgraded Bank of America Corporation (NYSE:BAC)’s stock from “Neutral” to “Outperform,” increasing the price objective to $50.00 from the previous target of $45.00. The upgrade demonstrated the firm’s confidence in the company’s financial prospects. The analyst highlighted the strength of Bank of America Corporation (NYSE:BAC)’s deposit franchise, relatively low credit risk, and consistent execution, together with strong markets businesses. Elsewhere, Fitch Ratings noted the company’s diversified business mix, leading market position, prudent liquidity management, and disciplined risk management.
Bank of America Corporation (NYSE:BAC)’s market position remains robust as it continues to leverage its vast network and diverse service offerings in a bid to maintain a competitive edge. Its capability to gain deposit market share as well as to benefit from a recovery in capital markets activity are being regarded as the key advantages. Also, Bank of America Corporation (NYSE:BAC) remains well-placed to capitalize on numerous growth opportunities. The expected recovery in capital markets activity can fuel its investment banking and trading revenues.
Diamond Hill Capital, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Other top Q4 contributors included Bank of America Corporation (NYSE:BAC), Parker-Hannifin and Labcorp. Banking and financial services company Bank of America benefited from broadly improved sentiment around banks as the market anticipates lower regulatory pressures under the incoming presidential administration. Shares also received a sentiment boost from growing optimism for better loan growth in the period ahead.”
Overall, BAC ranks 4th on our list of top 10 stock picks of Diamond Hill Capital. While we acknowledge the potential of BAC as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than BAC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.