Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Citigroup (C) Supplanted Atop Diamond Hill Capital’s Portfolio in Q1

Founded in 2000 by Ric DillonDiamond Hill Capital employs a value investing approach to stock picking and had approximately $18 billion in assets under management at the end of April. Mr. Dillon and his team focus their investment efforts on a long-term horizon, which is reflected in the top holdings of Diamond Hill as disclosed in its latest 13F filing, with three out of the top five positions having been established more than nine years ago. At the end of March, the fund’s equity portfolio carried holdings valued at $15.7 billion, with roughly a quarter of that invested in financial stocks and 18% of it devoted to consumer discretionary stocks. Over the course of the first quarter, Mr. Dillon and his managing partner Chuck Bath have done some shaking up of Diamond Hill Capital’s equity portfolio. In this article we’ll take a closer look at some of those changes and the portfolio’s current constitution.

We believe that imitating hedge funds and other large institutional investors can be helpful in identifying stocks capable of outperforming the broader market. Through extensive research that covered portfolios of several hundred large investors between 1999 and 2012, we determined that following the small-cap stocks that large money managers are collectively bullish on, can generate monthly returns nearly 1.0 percentage points above the market (see more details here).

Long-Term Energy Bet

First up is Cimarex Energy Co (NYSE:XEC), a Colorado-based oil and gas exploration company and one of Diamond Hill’s long-term investments, as the fund first reported a stake in the company at the end of 2003. Over the prevous quarter, the fund’s position in the stock was increased by 1% to 3.74 million shares worth approximately $363 million. Cimarex Energy Co (NYSE:XEC) recently reported first quarter results that missed Wall Street’s expectations. The company registered a loss of $186.1 million or $0.40 per share when adjusted for one-time costs, while revenue tumbled by 33% year-over-year to $240 million. Both figures were below analysts’ expectations, with them having anticipated a loss of $0.38 per share on the back of $248 million in revenue. As the stock was hammered from the middle of 2014 through the end of 2015 due to the slump in the oil markets, so too has it changed direction in 2016 thanks to oil’s modest recovery, with the stock currently up by 29% this year. Curtis Schenker and Craig Effron’s Scoggin holds a small stake in Cimarex Energy Co (NYSE:XEC) of 68,625 shares worth $6.67 million on March 31.

Follow Cimarex Energy Co (NYSE:XEC)
Trade (NYSE:XEC) Now!

UTX Stake Reduced

Mr. Dillon and his team decided to reduce the fund’s holding in United Technologies Corporation (NYSE:UTX) by 4% to 3.73 million shares valued at $373 million at the end of March. According to a recent note to investors, analysts at RBC Capital have cut their rating on United Technologies Corporation (NYSE:UTX) to ‘Sector Perform’ from ‘Outperform’ and reduced their price target to $108 per share from $109. The company reported first quarter results at the end of April, which amounted to a 16% drop in profit, while sales were flat. Nonetheless, the revenue of $13.4 billion and adjusted earnings of $1.47 per share managed to top analysts’ estimates of $13.03 billion in revenue and earnings of $1.38 per share. The results had additional significance after the company’s merger talks with Honeywell International Inc. (NYSE:HON) fell through in early March. Billionaire Ken Fisher‘s Fisher Asset Management indicated a 2% increase to its holding of United Technologies Corporation (NYSE:UTX) in its latest 13F filing, to 8.37 million shares worth $875 million at the end of March.

Follow United Technologies Corp (NYSE:UTX)
Trade (NYSE:UTX) Now!

Head over to the next page to find out about Diamond Hill Capital’s top-3 positions.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.