Diamond Hill Capital was founded by Ric Dillon back in 2000 and is currently co-managed by Ric Dillon and Chuck Bath. The fund follows a bottom-up investing style and looks at fundamentals such as normalized earnings and growth rate, and terminal earnings multiple among others to identify intrinsic value of stocks.
The equity value of Diamond Hill’s portfolio stood at $15.83 billion at the end of the second quarter. According to the fund’s latest 13F filing, it had around 26% invested in financial stocks and in this article we are going to take a closer look at the largest positions it held in this sector at the end of June.
An everyday investor doesn’t have the same resources and capabilities to analyze different publicly-traded companies as hedge funds do. This is why it is a good idea to see what stocks hedge funds like the most and try to imitate some of their bullish moves in an attempt to reap market-beating returns. At Insider Monkey, we analyze 13F filings of over 740 smart money investors and use the data to see what stocks they are collectively bullish on (see more details here).
Citigroup Inc. (NYSE:C) was Diamond Hill’s second-biggest holding overall and the largest position in the Financial sector at the end of the second quarter. Diamond Hill held 10.21 million shares worth $433.03 million. During the quarter, the fund added 247,356 shares. At the end of the second quarter, 97 funds from our database were long Citigroup shares, holding approximately $8.5 billion worth of shares, compared to 101 funds holding $8.03 billion worth of stock a quarter earlier. As the U.S. banking industry had its most profitable quarter ever in the April-June period, with earnings totaling $43.6 billion, Citigroup Inc.(NYSE:C) managed to post results above the estimates. The bank reported second-quarter earnings of $1.24 per share on revenue of $17.55 billion, beating consensus estimates by $0.14 and $80 million, respectively.
Diamond Hill held 5.18 million shares of Capital One Financial Corp. (NYSE:COF) shares at the end of June, up by 226,823 shares over the quarter. The value of the position amounted to $329.17 million. The number of funds tracked by us long Diamond Hill inched down by one to 46 during the April-June period, while the aggregate value of their positions advanced to $1.35 billion from $1.27 billion Capital One Financial is scheduled to report its third-quarter results on October 20 and analysts expect earnings of $1.96 per share on revenue of $6.41 billion.
In Morgan Stanley (NYSE:MS) Ric Dillon’s fund increased its position by 418,900 shares during the quarter to 12.15 million shares worth $315.65 million. Morgan Stanley saw 49 funds from our database holding $2.92 billion worth of shares at the end of June, which represented around 5.80% of the outstanding shares. In the second quarter of 2016, Morgan Stanley registered earnings of $0.55 per share, beating estimates of $0.46 per share, while its revenue of $7.79 billion, missed the consensus forecast by $80 million.
Read about Diamond Hill’s other favorite financial stocks on the next page.