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."

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An open-pit quarry with heavy machinery and workers at a lime and limestone production facility.

United States Lime & Minerals, Inc. (NASDAQ:USLM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held United States Lime & Minerals, Inc. (NASDAQ:USLM) at the end of the third quarter which was 11 in the previous quarter. While we acknowledge the potential of United States Lime & Minerals, Inc. (NASDAQ:USLM) 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 another article we discussed United States Lime & Minerals, Inc. (NASDAQ:USLM) and shared the list of best construction materials stocks to buy. Favorable limestone pricing leading to strong results for United States Lime & Minerals, Inc. (NASDAQ:USLM) and boosting Diamond Hill Small Cap Fund's performance last quarter. In addition, please check out our hedge fund investor letters Q3 2024 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.

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