Diamond Hill Capital Mid Cap Strategy Trails Index in Q2

Diamond Hill Capital, a First Eagle Investment Management company, reported that its Mid Cap Strategy earned a 7.92% return in the second quarter of 2026. This performance trailed the Russell Midcap Index, which returned 13.83% during the same period.

The firm attributed the underperformance to specific stock selection and an underweight position in the information technology sector. A primary contributor to the lag was Huntington Ingalls Industries, Inc., which struggled following mixed first-quarter 2026 results. Although the shipbuilder experienced strong revenue growth, it faced margin pressure resulting from legacy pre-COVID contracts and execution challenges.

Diamond Hill Capital further noted that the broader defense sector weakened. The firm linked this decline to delays in U.S. defense funding legislation and a reduction in geopolitical tensions.