Diamond Hill Capital, an investment management company, released its “Small Cap Fund” third-quarter 2024 investor letter. A copy of the letter can be downloaded here. In Q3, markets contributed to strong year-to-date gains, though not without some volatility. As shown by the Russell 2000 Index, small-cap equities increased by 9%, while the broad market Russell 3000 Index increased by slightly more than 6%. Against this backdrop, the strategy trailed the index and returned 8.43% in the quarter compared to 9.27% for the Russell 2000 Index. For more information on the fund’s top picks in 2024, please check its top five holdings.

Diamond Hill Small Cap Fund highlighted stocks like Civitas Resources, Inc. (NYSE:CIVI) in the third quarter 2024 investor letter. Civitas Resources, Inc. (NYSE:CIVI) is an oil and natural gas exploration and production company. The one-month return of Civitas Resources, Inc. (NYSE:CIVI) was -8.40%, and its shares lost 36.21% of their value over the last 52 weeks. On October 30, 2024, Civitas Resources, Inc. (NYSE:CIVI) stock closed at $49.04 per share with a market capitalization of $4.838 billion.

Diamond Hill Small Cap Fund stated the following regarding Civitas Resources, Inc. (NYSE:CIVI) in its Q3 2024 investor letter:

"Among our bottom Q3 contributors were Civitas Resources, Inc. (NYSE:CIVI) and Ashland. Oil and gas exploration and production company Civitas Resources was pressured against a backdrop of weakening future global oil demand, which weighed in turn on WTI (West Texas Intermediate) and Brent crude prices and, consequently, the energy sector overall."

A close up of a tanker truck transporting crude oil, natural gas liquids, and natural gas.

Civitas Resources, Inc. (NYSE:CIVI) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held Civitas Resources, Inc. (NYSE:CIVI) at the end of the second quarter which was 37 in the previous quarter. While we acknowledge the potential of Civitas Resources, Inc. (NYSE:CIVI) 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 Civitas Resources, Inc. (NYSE:CIVI) and shared the list of best depressed stocks to buy heading into 2025. Diamond Hill Mid Cap Strategy added Civitas Resources, Inc. (NYSE:CIVI) to its portfolio in Q2 2024, believing its assets and cash flow potential are undervalued. 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.