Diamond Hill Long-Short Strategy Q1 2026 Portfolio Movers: Gains, Drags, And Trades

Diamond Hill’s Q1 long-short letter says equity volatility rose following Middle East tensions. The fund held net exposure of 58% (below its 60% long-term average) with gross exposure at 122%, favoring high-conviction longs. Software names — led by Microsoft — were notable detractors, while energy names (Chevron and Diamondback Energy) benefited from a sharp rise in oil prices. The firm initiated a new long in Gartner, exited Penumbra after its takeover by Boston Scientific, and added targeted shorts (FRO, NEU, AKAM) based on fading tailwinds and competitive pressures. Diamond Hill cautions that recent oil-driven tailwinds may fade as shipping flows normalize and VLCC supply increases. Overall the letter is a portfolio-level institutional outlook describing positioning, conviction in select software exposure despite AI-related risks, and opportunistic adjustments across longs and shorts.