Here’s Why Small-Mid Cap Strategy Sold Its Stake in Insperity (NSP)

Diamond Hill Capital, an investment management company, released its “Small-Mid Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q2, the market surged uniformly for the rest of the quarter following a sharp decline in April due to President Trump’s “Liberation Day” tariffs announcement. The portfolio returned 5.60% (gross) and 5.37% (net) compared to an 8.59% return for the Russell 2500 Index. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its second-quarter 2025 investor letter, Diamond Hill Small-Mid Cap Fund highlighted stocks such as Insperity, Inc. (NYSE:NSP). Headquartered in Kingwood, Texas, Insperity, Inc. (NYSE:NSP) is a human resource (HR) and business solutions provider to improve the performance of small and medium-sized businesses. The one-month return of Insperity, Inc. (NYSE:NSP) was -13.45%, and its shares lost 45.95% of their value over the last 52 weeks. On August 11, 2025, Insperity, Inc. (NYSE:NSP) stock closed at $49.85 per share, with a market capitalization of $1.878 billion.

Diamond Hill Small-Mid Cap Fund  stated the following regarding Insperity, Inc. (NYSE:NSP) in its second quarter 2025 investor letter:

“Among our bottom individual Q2 contributors to return were Insperity, Inc. (NYSE:NSP) and Civitas Resources. Insperity provides human resources (HR) and business solutions primarily to US-based small and mid-sized businesses. Shares were pressured in the quarter as higher-than-expected health care costs impacted the company’s insurance book, and the company’s worksite employee count grew at a tepid rate. Our confidence in the company’s execution across multiple fronts — including its Workday partnership, ability to grow worksite employees, manage its health insurance book of business and improve margins — has increasingly weakened. Further, the potential for AI disruption is a longer term risk to Insperity’s worksite employee base. With these factors pressuring the share price and limited visibility into a meaningful turnaround over the course of our investment horizon, we exited our position during the quarter, redeploying the proceeds to more attractive risk-reward opportunities.”

A close-up of a hand signing a contract, symbolizing the legal agreement between employer and employee.

Insperity, Inc. (NYSE:NSP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 25 hedge fund portfolios held Insperity, Inc. (NYSE:NSP) at the end of the first quarter, which was 21 in the previous quarter. While we acknowledge the risk and potential of Insperity, Inc. (NYSE:NSP) 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 Insperity, Inc. (NYSE:NSP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Insperity, Inc. (NYSE:NSP) contributed to Diamond Hill Small Cap Fund’s performance in the previous quarter. In addition, please check out our hedge fund investor letters Q2 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.