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 Knowles Corporation (NYSE:KN) as a newly added position. Knowles Corporation (NYSE:KN) is a specialty electronic components manufacturer that offers capacitors, radio frequency (RF) and microwave filters, balanced armature speakers, and medtech microphones. On May 4, 2026, Knowles Corporation (NYSE:KN) closed at $31.93 per share. One-month return of Knowles Corporation (NYSE:KN) was 20.40%, and its shares gained 97.71% over the past 52 weeks. Knowles Corporation (NYSE:KN) has a market capitalization of $2.73 billion.
Diamond Hill Small Cap Strategy stated the following regarding Knowles Corporation (NYSE:KN) in its Q1 2026 investor letter:
“Knowles Corporation (NYSE:KN) is a global manufacturer of specialty electronic components serving medical, defense and industrial markets. Recent strategic initiatives have reshaped the portfolio toward higher-margin, mission-critical end markets with more durable demand drivers. We believe the current valuation does not fully reflect the improved business mix and long-term growth potential, so we initiated a position during the quarter.”
Knowles Corporation (NYSE:KN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 30 hedge fund portfolios held Knowles Corporation (NYSE:KN) at the end of the fourth quarter, up from 21 in the previous quarter. In Q1 2026, Knowles Corporation (NYSE:KN) delivered revenue of $153 million, representing a 16% year-over-year growth. While we acknowledge the risk and potential of Knowles Corporation (NYSE:KN) 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 Knowles Corporation (NYSE:KN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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.
