Here’s Why Diamond Hill Mid Cap Strategy Established a Position in Ventas (VTR)

Diamond Hill Capital, an investment management company, released its “Mid Cap Strategy” investor letter for the first quarter of 2025. A copy of the letter can be downloaded here. The first quarter of 2025 was mixed due to a flurry of activity from the new presidential administration. However, the strategy outperformed the Russell Midcap Index in Q1, returning -1.26% (net) vs -3.40% for the index. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2025.

In its first-quarter 2025 investor letter, Diamond Hill Mid Cap Strategy highlighted stocks such as Ventas, Inc. (NYSE:VTR). Ventas, Inc. (NYSE:VTR) is a leading real estate investment trust. The one-month return of Ventas, Inc. (NYSE:VTR) was -3.66%, and its shares gained 26.77% of their value over the last 52 weeks. On June 4, 2025, Ventas, Inc. (NYSE:VTR) stock closed at $63.18 per share with a market capitalization of $28.513 billion.

Diamond Hill Mid Cap Strategy stated the following regarding Ventas, Inc. (NYSE:VTR) in its Q1 2025 investor letter:

“As volatility picked up sharply in the quarter, we were active in the portfolio — and we anticipate that as volatility continues into Q2, we will likewise attempt to capitalize on compelling opportunities to reposition the portfolio for the period ahead. We initiated four new positions in Q1: Martin Marietta Materials, Ventas, Inc. (NYSE:VTR), Illumina and TransUnion.

Ventas is a diversified health care real estate investment trust (REIT) focused on private-pay senior housing — primarily independent and assisted living — as well as outpatient medical offices and research/life sciences. The demographics around senior housing are compelling over the medium term: The 80+ age cohort in the US is rapidly growing, while senior housing is limited, which should drive years of strong growth as the industry recovers from oversupply and post-COVID weakness. We anticipate occupancy should improve meaningfully, while pricing is likely to remain solid as senior care is a needs-based business. At approximately 85% occupancy, a facility generally requires full staffing, making additional tenants beyond that occupancy level significantly higher margin. We also don’t anticipate significant new facility development — and even when it starts, it could take some time before annual new construction catches up with demand. Further, recently weaker fundamentals among competitors could create attractive acquisition opportunities for Ventas. Finally, the company’s operating platform and pricing software should bring institutional sophistication to a business that has long been tech-averse, giving it a significant and growing competitive advantage. Given we don’t believe the valuation adequately reflects these advantages, we initiated a position in Q1.”

Ventas, Inc. (NYSE:VTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Ventas, Inc. (NYSE:VTR) at the end of the first quarter, which was 43 in the previous quarter. While we acknowledge the potential of Ventas, Inc. (NYSE:VTR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Ventas, Inc. (NYSE:VTR) and shared the list of real estate stocks surging in 2025. In addition, please check out our hedge fund investor letters Q1 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.