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 Mesa Laboratories, Inc. (NASDAQ:MLAB). Mesa Laboratories, Inc. (NASDAQ:MLAB) develops, designs, manufactures, sells, and services life sciences tools and quality control products and services. One-month return of Mesa Laboratories, Inc. (NASDAQ:MLAB) was 3.99%, and its shares gained 36.79% of their value over the last 52 weeks. On February 12, 2025, Mesa Laboratories, Inc. (NASDAQ:MLAB) stock closed at $142.63 per share with a market capitalization of $774.996 million.

Diamond Hill Small Cap Fund stated the following regarding Mesa Laboratories, Inc. (NASDAQ:MLAB) in its Q4 2024 investor letter:

"As valuations have continued rising and the economic cycle has gotten relatively long in the tooth, it’s become increasingly challenging to find high-quality, small-cap companies trading at attractive discounts to their intrinsic values. However, given the neglected pool of opportunities and our lunch pail mentality, the quarter yielded several new positions to the portfolio, including FTAI Infrastructure, Mesa Laboratories, Inc. (NASDAQ:MLAB), Cimpress and Curbline Properties.

Mesa Laboratories is a diversified life sciences company which has transformed itself from a traditional lab equipment manufacturer to a comprehensive provider of critical biopharmaceutical and diagnostic solutions, making it more valuable. We believe it is strategically positioned to benefit from high-growth market segments through organic growth and strategic acquisitions — particularly under current CEO Gary Owns, who has a track record of successfully acquiring and integrating companies in his previous post at Danaher. We believe this strategy of acquiring established technologies with an existing market presence will help mitigate execution risk at Mesa Laboratories, and we believe the growth trajectory from here is attractive."

A scientist conducting a test in a lab, with a background of complex equipment.

Mesa Laboratories, Inc. (NASDAQ:MLAB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held Mesa Laboratories, Inc. (NASDAQ:MLAB) at the end of the third quarter which was 11 in the previous quarter. While we acknowledge the potential of Mesa Laboratories, Inc. (NASDAQ:MLAB) 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 Mesa Laboratories, Inc. (NASDAQ:MLAB) and shared Conestoga Capital Advisors' views on the company in the previous 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.