Diamond Hill Capital, an investment management company, released its “Small Cap Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1, markets were uneven due to the new presidential administration’s activity, leading to concern about the future. The Russell 3000 Index fell by 4.7% in Q1, the first quarterly loss since Q3 2023. Diamond Hill Small Cap Fund returned -11.56% in Q1, trailing the Russell 2000 Index’s -9.48% return. For more information on the fund’s top picks in 2025, please check its top five holdings.
In its first-quarter 2025 investor letter, Diamond Hill Small Cap Fund highlighted stocks such as Helios Technologies, Inc. (NYSE:HLIO). Headquartered in Sarasota, Florida, Helios Technologies, Inc. (NYSE:HLIO) is an industrial technology company that operates in the Hydraulics and Electronics segments. The one-month return of Helios Technologies, Inc. (NYSE:HLIO) was 7.68%, and its shares lost 42.60% of their value over the last 52 weeks. On May 5, 2025, Helios Technologies, Inc. (NYSE:HLIO) stock closed at $27.74 per share with a market capitalization of $920.958 million.
Diamond Hill Small Cap Fund stated the following regarding Helios Technologies, Inc. (NYSE:HLIO) 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 three new positions in Q1, including in Helios Technologies, Inc. (NYSE:HLIO), Titan America and Avanos Medical.
Helios Technologies is a well-respected provider of specialized hydraulic and electronic components to construction and agricultural equipment manufacturers. The company is transforming itself into a more diversified provider of higher-technology integrated systems to its customers. Recent cyclical headwinds have pressured earnings, and some execution missteps, combined with significant capacity additions that the company hasn’t yet absorbed, have combined to weigh on the valuation. However, we believe as Helios’s end markets recover, the company should enjoy meaningful margin growth, which we believe is not reflected in the current valuation. We consequently capitalized on the opportunity to initiate a position in the quarter.”
A hydraulic technician in the process of assembling a hydraulic system.
Helios Technologies, Inc. (NYSE:HLIO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 9 hedge fund portfolios held Helios Technologies, Inc. (NYSE:HLIO) at the end of the fourth quarter, compared to 8 in the third quarter. While we acknowledge the potential of Helios Technologies, Inc. (NYSE:HLIO) 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 cheapest AI stock.
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.