Summary

• The Diamond Hill Small-Mid Cap Fund declined 2.63% and the Russell 2500 Index increased 2.04% during the first quarter of 2026.
• Energy was the best-performing sector, advancing 39% as oil prices rose sharply due to supply concerns following the closure of the Strait of Hormuz.
• Diamond Hill remains underweight in companies benefitting from substantial AI-related capital spending, including Lumentum Holdings and Comfort Systems, which served as a relative headwind.
• Diamond Hill initiated a position in Humana, believing the share price does not reflect the company's earnings power despite pressure from rising health care costs.
• The Fund exited positions in Civitas Resources and SM Energy following their merger, as management did not view the strategic rationale for the deal as compelling.

Quarterly Snapshot

Performance

The Fund declined 2.63% and the Russell 2500 Index increased 2.04%.

Key Drivers

Stock selection within health care and industrials were the largest relative detractors.

Summary

We remain somewhat cautious given

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