Diamond Hill Capital, a First Eagle Investment Management company, issued its Q2 2026 investor letter for its “Mid Cap Strategy”. A copy of the Q2 2026 investor letter can be downloaded here. In the quarter, equity markets posted strong returns as resilient economic growth and robust corporate earnings supported investor sentiment, although AI-related companies continued to dominate market leadership. Technology was the strongest-performing sector, while industrials also advanced and energy lagged as oil prices declined. The Fund returned 7.92% and the Russell Midcap Index returned 13.83%. Health care holdings were the largest positive contributor, supported by strength across managed care, diagnostics, and life sciences. However, stock selection and an underweight position in information technology remained the main relative headwinds. The strategy maintained limited exposure to highly valued semiconductor and memory companies, reflecting concerns that current valuations assume an extended period of elevated AI spending. It also continued to assess software and services businesses individually based on how AI may affect their long-term competitive positions. Management emphasized higher-quality companies, attractive valuations, capital preservation, and durable long-term compounding while remaining cautious about elevated valuations, concentrated leadership, and the sustainability of the current AI investment cycle. Please review the Strategy’s top five holdings for its key selections.
In its second-quarter 2026 investor letter, Diamond Hill Capital Mid Cap Strategy highlighted Illumina, Inc. (NASDAQ:ILMN). Illumina, Inc. (NASDAQ:ILMN) is a biotechnology company that focuses on sequencing- and array-based solutions for genetic and genomic analysis. On August 4, 2026, Illumina, Inc. (NASDAQ:ILMN) closed at $203.01 per share. One-month return of Illumina, Inc. (NASDAQ:ILMN) was 6.92% and its shares gained 112.65% over the past 52 weeks. Illumina, Inc. (NASDAQ:ILMN) has a market capitalization of $30.65 billion with a 52-week trading range between $88.00 – $207.00.
Diamond Hill Capital Mid Cap Strategy stated the following regarding Illumina, Inc. (NASDAQ:ILMN) in its Q2 2026 investor letter:
“Biotechnology company Illumina, Inc. (NASDAQ:ILMN) is the leading producer of next generation sequencing systems, which are used to sequence DNA for research and are increasingly important in cancer diagnosis and treatment. Shares rose during the quarter after better-than-expected clinical growth, while competitor Roche’s comparable product launch appeared underwhelming.”
Illumina, Inc. (NASDAQ:ILMN) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Illumina, Inc. (NASDAQ:ILMN) at the end of the first quarter which was 46 in the previous quarter. While we acknowledge the risk and potential of Illumina, Inc. (NASDAQ:ILMN) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Illumina, Inc. (NASDAQ:ILMN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Illumina, Inc. (NASDAQ:ILMN) and shared Billionaire Cliff Asness’ top healthcare stock picks. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
