Here’s Why Diamond Hill Large Cap Fund Added Solventum (SOLV) to Its Portfolio

Diamond Hill Capital, an investment management company, released its “Large Cap Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their upward momentum in Q4, with the Russell 1000 Value Index increasing 3.8%. The information technology (+11%) and communication services (+9%) sectors are leading the rally, driven by AI optimism. The growth areas of the market accounted for the majority of the Index’s return in Q4. The firm maintains a cautious stance toward AI-driven market enthusiasm and believes that, fundamentally stable, high-quality, cash-generative businesses present attractive opportunities. Against this backdrop, the Fund returned 1.41% in the quarter, lagging the Russell 1000 Value Index’s 3.8% return. In addition, you can check the Fund’s top five holdings to see its best picks for 2025.

In its fourth-quarter 2025 investor letter, Diamond Hill Large Cap Fund highlighted Solventum Corporation (NYSE:SOLV) as a new addition. Solventum Corporation (NYSE:SOLV) is a healthcare company that operates through Medsurg, Dental Solutions, and Health Information Systems segments. The one-month return for Solventum Corporation (NYSE:SOLV) was -7.52%, and its shares gained 3.08% over the last 52 weeks. On February 02, 2026, Solventum Corporation (NYSE:SOLV) stock closed at $76.91 per share, with a market capitalization of $13.34 billion.

Diamond Hill Large Cap Fund stated the following regarding Solventum Corporation (NYSE:SOLV) in its fourth quarter 2025 investor letter:

“Medical products and health care IT services company Solventum Corporation (NYSE:SOLV) was spun off from 3M in April 2024. We believe the company will likely show improved growth and margins as a standalone company, as the business has previously been challenged by years of underinvestment and market share losses. Solventum’s new management team is focused on improving revenue growth, and we expect to see more fully optimized research and development and improved sales mix from new products moving forward.”

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Solventum Corporation (NYSE:SOLV) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held Solventum Corporation (NYSE:SOLV) at the end of the third quarter, which was 37 in the previous quarter. While we acknowledge the risk and potential of Solventum Corporation (NYSE:SOLV) 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 Solventum Corporation (NYSE:SOLV) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Solventum Corporation (NYSE:SOLV) and shared Pzena Focused Value Strategy’s views on the company last quarter. In addition, please check out our hedge fund investor letters Q4 2025 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.