DHIL

Diamond Hill ($DHIL) Director Accumulates $472,600 in Shares During 20% Price Drop - Undervaluation Signal?

05/07/2025 13:13

Diamond Hill Investment Group ($DHIL) director Richard Cooley has been consistently purchasing substantial amounts of company stock during recent price declines, catching the attention of investors. Cooley has shown particularly aggressive buying activity this year. From February 28 to May 6, 2025, he acquired a total of 3,516 shares worth approximately $472,600 in just over two months. What's especially noteworthy is that his most concentrated purchases occurred during $DHIL's significant price drop from late April through early May. In just one week between April 30 and May 6, 2025, he purchased 2,094 shares (approximately $266,000). This buying pattern isn't isolated but rather shows consistent behavior. Cooley previously purchased 500 shares in June 2024 and 1,000 shares in December 2024, suggesting a long-term stock accumulation strategy. Diamond Hill Investment Group, headquartered in Columbus, Ohio, is an asset management firm providing investment advisory and fund administration services through its subsidiary, Diamond Hill Capital Management. The company offers various investment vehicles including separately managed accounts (SMAs) and collective investment trusts, along with comprehensive fund administration services. $DHIL stock reached a high of around $168 in mid-November 2024 before beginning a downward trend, with a particularly sharp decline starting in early April 2025, bottoming at $125.49 on April 21. While it has rebounded slightly to $135.75 as of May 6, the stock remains approximately 20% below its 52-week high. Despite the stock decline, the company's financial health remains relatively solid. According to their Q1 2025 earnings release (April 29), the company reported EPS of $3.77, revenue of $37.1 million, and an operating margin of 35%. On a trailing twelve-month basis, net income stands at $40.52 million with an impressive profit margin of 26.67%. Although Q1 2025 net income ($10.4 million) decreased by 20% compared to the same period last year, the aggressive buying activity from insiders, particularly Director Cooley, is noteworthy. Currently, $DHIL trades at a TTM P/E ratio of 9.17, relatively undervalued compared to industry averages, while offering a high dividend yield of 4.42% (annual dividend of $6.00) and a strong ROE of 24.77%. Interestingly, insider trading patterns show strong correlation with stock price movements. During the uptrend from August to November 2024, Director James F. Laird Jr. and several other directors sold a total of 15,850 shares (worth approximately $2.6 million). Conversely, Director Cooley's concentrated buying has continued since early 2025 during the price decline. Additionally, during the June 2024 market dip, CEO Heather Brilliant and officer Jo Ann Quinif purchased 550 and 400 shares respectively, demonstrating a pattern where management buys company stock during perceived undervaluation periods. These insider purchases may reflect confidence in $DHIL's long-term value despite recent global financial market instability. Even with external variables such as inflation concerns, interest rate policy uncertainties in early 2025, and April's U.S. dollar weakness and protectionist policy concerns, insiders have steadily acquired company shares. Currently classified as a small-cap with a market capitalization of approximately $370 million, Diamond Hill is a relatively small player in the asset management industry. However, its stable revenue structure, high dividend yield, and relatively low P/E ratio could make it attractive to value investors. Key points to watch going forward include the upcoming Q2 2025 earnings announcement and whether insider buying, particularly from Director Cooley, continues. If this insider trading pattern persists, it could be interpreted as a strong signal that management views the current stock price as undervalued, which could serve as an important reference indicator for investors.

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