In the latest round of 13F filings, Diamond Hill Capital Management, managed by Ric Dillon, is another hedge fund that disclosed all of its equities as of the end of the second quarter. We’ve found one very dominant market-beating strategy embedded in a corner of the hedge fund marketplace; discover the secrets of this strategy here.
What you should know about Diamond Hill Capital Management, is that it was founded in 2000 and its investing strategy involves a bottom-up fundamental approach, and to determine the intrinsic value of equities, it uses metrics such as normalized earnings, payout ratios and dividend indicators. Overall, the hedge fund has about $10 billion in AUM.
Hedge funds are some of the most sophisticated mechanisms of the investment world. To help you better understand what a hedge fund is, take a look at our comparison of a hedge fund vs a mutual fund.
However, let’s get back to Diamond Hill and its top five stock picks.
As follows, in first is Prudential Financial Inc (NYSE:PRU), in which the hedge fund disclosed ownership of 3.9 million shares, worth $283.3 million. During the second quarter of the year, the hedge fund increased its position in Prudential Financial Inc (NYSE:PRU) by 652,451 shares.
The next on the list follows Medtronic, Inc. (NYSE:MDT), represented in Ric Dillon’s 13F by a $275.7 million stake, which involves 5.4 million shares, down by 11% or 703,128 shares over the quarter. The stock of Medtronic, Inc. (NYSE:MDT), showed a year-to-date return of almost 34% and sports a P/E of 16.2x.
In Occidental Petroleum Corporation (NYSE:OXY), Diamond Hill reported a stake of 3.1 million shares, with its value amounting to $275.4 million. Since the end of March, the position in Occidental Petroleum Corporation (NYSE:OXY) has decreased by over 200,000 shares.
The fourth-largest position in Diamond Hill’s equity portfolio is represented by Citigroup Inc. (NYSE:C), in which the hedge fund disclosed a $268.5 million of about 5.6 million shares, down by 7% since the end of the first quarter. The stock of Citigroup Inc. (NYSE:C) shows a year-to-date return of almost 31%, however, so the position has been a net positive for Dillon.
Last is hedge funds’ favorite financial stock, American International Group Inc (NYSE:AIG). Diamond Hill reported almost 6 million shares, worth $267.7 million. At the end of the first quarter of 2013, the hedge fund’s position in American International Group Inc (NYSE:AIG) involved about 6.5 million shares and was worth $251.6 million.
On the whole, the 13F portfolio of Diamond Hill contains 150 positions and is worth $9.3 billion, down from the previous value of $9.5 billion.
Aside from Diamond Hill, take a look at Tom Sandell’s Sandell Asset Management, Michael Blitzer’s Kingstown Capital Management, and James Pallotta’s Raptor Capital Management for more related coverage.