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Diamond Hill Investment Group Weathers Market Headwinds

By Steve Symington - May 4, 2018 at 9:00AM

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With the wind in its face, the investment management company started 2018 strong.

Diamond Hill Investment Group Inc. (DHIL -0.26%) announced first-quarter 2018 results on Wednesday. Despite market depreciation, the investment management company highlighted continued year-over-year growth in its assets under management and book value per share, and reiterated its disciplined approach toward generating shareholder value.

Let's take a closer look at what Diamond Hill Investment Group accomplished over the past few months, as well as what investors should expect going forward.

Man studying investments at his laptop computer

IMAGE SOURCE: GETTY IMAGES.

Diamond Hill Investment Group results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Growth

Revenue

$37.8 million

$35.1 million

7.7%

Net income attributable to common shareholders

$13.0 million

$12.8 million

1.8%

Earnings per share attributable to common shareholders

$3.72

$3.71

0.3%

DATA SOURCE: DIAMOND HILL INVESTMENT GROUP.

What happened with Diamond Hill Investment Group this quarter?

  • Within Diamond Hill's top line, investment advisory fees grew 8.8% year over year to $34.6 million, and mutual fund administration fees slipped 4.5% to $3.2 million.
  • Net cash inflows included $187 million from proprietary funds and $104 million from sub-advised funds. These inflows were only partially offset by a net cash outflow of $35 million from institutional accounts.
  • Coupled with net market depreciation of $644 million this quarter -- a shift that's roughly in line with the broader market's recent declines -- that meant Diamond Hill's assets under management (AUM) fell 1.7% sequentially from last quarter to $21.929 billion, but also increased 7.8% year over year.
  • Adjusted net operating income rose 25.2% year over year to $13.8 million.
  • Book value per share went up 18.9% year over year to $54.25.

Looking ahead

Diamond Hill management doesn't typically provide canned statements or financial guidance in its earnings reports. But during the annual shareholder meeting earlier this week, it did note that the company continues to build out its team that's focused on fixed income assets under management, which are now in excess of $1 billion. Diamond Hill also provided updated capacity estimates; its equity capacity now stands at $25 billion to $35 billion, while its fixed income capacity stands "at least" $40 billion.

Perhaps more importantly, it reiterated that Diamond Hill Investment Group maintains a disciplined, long-term focus with its investment strategies that are designed to align its interests with those of clients. So, without offering much additional detail, the company says it's "in the process of realigning business development initiatives to best serve our current and future clients."

In the end, whether the market acknowledges as much remains to be seen, but this was a solid quarter from Diamond Hill Investment Group. As its assets under management continue to rise, and as its advisory fees and intrinsic value follow suit, I think investors should be pleased with its position today.

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Diamond Hill Investment Group Stock Quote
Diamond Hill Investment Group
DHIL
$173.64 (-0.26%) $0.46

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