Diamond Hill’s Large Cap Fund Trails in Q3 as It Exits Lululemon, Notes Caterpillar Strength

The investor letter links results to security selection, from leaving Lululemon to gains tied to data‑center power at Caterpillar.

Overview

The fund reported a quarterly decline and underperformance versus the Russell 1000 Value Index despite an 8% Q3 rise in the Russell 3000.
Lululemon was a bottom contributor, with Diamond Hill citing weak merchandise reception, competitive and fashion pressures, and tariff exposure from the removal of the de minimis import exemption.
The manager said it exited its Lululemon position during the quarter to reallocate to more attractive opportunities.
Caterpillar was a top contributor, supported by positive sentiment toward its power‑generation business connected to data‑center growth.
As of Nov. 5, 2025, Lululemon shares were down 46.85% year over year while Caterpillar was up 39.98%, closing at $167.59 and $569.30, respectively.