Diamond Hill Capital, a First Eagle Investment Management company, issued its Q1 2026 investor letter for its “Small Cap Strategy”. A copy of the letter can be downloaded here. Small caps started 2026 strong, following 2025, but pulled back late in the quarter due to geopolitical tensions, with the US and Israel acting against Iran. The Russell 2000 gained 0.89%, outperforming the Russell 1000’s 4.18% decline. Energy was the leading sector, up 38% as oil prices surged amid supply fears. The strategy returned 3.41% (net) vs. the Russell 2000’s 0.89%. The Fund focuses on resilient businesses amid volatility, aiming to navigate uncertainty and capitalize on market opportunities. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Diamond Hill Small Cap Strategy highlighted stocks like Red Rock Resorts, Inc. (NASDAQ:RRR). Headquartered in Las Vegas, Nevada, Red Rock Resorts, Inc. (NASDAQ:RRR) develops and operates casino and entertainment properties. One-month return of Red Rock Resorts, Inc. (NASDAQ:RRR) was -7.14%, and its shares gained 18.50% of their value over the last 52 weeks. On May 1, 2026, Red Rock Resorts, Inc. (NASDAQ:RRR) stock closed at $52.78 per share, with a market capitalization of $5.54 billion.
Diamond Hill Small Cap Strategy stated the following regarding Red Rock Resorts, Inc. (NASDAQ:RRR) in its Q1 2026 investor letter:
“Red Rock Resorts, Inc.’s (NASDAQ:RRR) fundamentals remained solid, though the stock faced pressure in Q1 as investors linked gaming demand to discretionary spending trends. Concerns around rising fuel prices, particularly following geopolitical tensions, weighed on sentiment given the perceived impact on consumer budgets. However, the company’s increasingly diversified customer base has historically shown resilience to these pressures.”
Red Rock Resorts, Inc. (NASDAQ:RRR) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 35 hedge fund portfolios held Red Rock Resorts, Inc. (NASDAQ:RRR) at the end of the fourth quarter, up from 31 in the previous quarter. While we acknowledge the risk and potential of Red Rock Resorts, Inc. (NASDAQ:RRR) 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 Red Rock Resorts, Inc. (NASDAQ:RRR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Red Rock Resorts, Inc. (NASDAQ:RRR) and shared Baron Focused Growth Fund’s insights on the company. In addition, please check out our hedge fund investor letters Q1 2026 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.
