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Diamond Hill Capital, an investment management company, released its “Small Cap Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. In Q4, markets rose unevenly, ending another positive year for markets. Stocks rose generally after the US election, but several lost most or all of their gains before the end of the year. Against this backdrop, the strategy outperformed the Russell 2000 Index in Q4 and for the full year. Relative strength in Q4 was concentrated among industrials holdings outperforming benchmark peers by a wide margin. Additionally, consumer staples and energy holdings also provided relative tailwinds. On the other hand, consumer discretionary holdings were the main cause of strategy’s relative weakness. Even though holdings were quite favorable on an absolute basis, underweight to the technology sector was another headwind in Q4. The strategy returned 0.93% in Q4 and 13.22% in 2024, compared to 0.33% and 11.54% return for Russell 2000 Index for the same periods. For more information on the fund’s top picks in 2024, please check its top five holdings.
In its fourth quarter 2024 investor letter, Diamond Hill Small Cap Fund emphasized stocks such as United States Lime & Minerals, Inc. (NASDAQ:USLM). United States Lime & Minerals, Inc. (NASDAQ:USLM) manufactures and supplies lime and limestone products. The one-month return of United States Lime & Minerals, Inc. (NASDAQ:USLM) was -18.22%, and its shares gained 98.62% of their value over the last 52 weeks. On February 12, 2025, United States Lime & Minerals, Inc. (NASDAQ:USLM) stock closed at $102.49 per share with a market capitalization of $2.931 billion.
Diamond Hill Small Cap Fund stated the following regarding United States Lime & Minerals, Inc. (NASDAQ:USLM) in its Q4 2024 investor letter:
"On an individual holdings’ basis, among our top Q4 contributors were Allegiant Travel and United States Lime & Minerals, Inc. (NASDAQ:USLM). United States Lime & Minerals (USLM) manufactures and supplies lime and limestone products to various construction and industrial customers. During Q4, USLM benefited from a particularly beneficial confluence of factors: Higher average selling prices for lime and limestone products as well as increased sales volumes to construction and roof shingle customers have helped drive robust revenue growth. Further, USLM effectively managed its relatively fixed cost base, allowing increased prices to flow directly to higher margins and resulting in record margins in Q4. The company also benefited from lower natural gas prices and favorable direct labor, raw materials, energy, transportation and plant operating cost conditions — all of which supported profitability. Finally, USLM’s strategic position in Texas’s growing I-35 corridor as well as strong pricing power in key markets and effective variable cost management contributed to margin expansion in Q4."