Model Portfolio teriksen:ESVF

The Long-Short fund currently accounts for just under 50% of the firm's assets under management (AUM). While the closing of the fund will likely decrease DHIL's growth rate in assets, it reinforces Diamond Hill's commitment to putting investor returns first. While not admitting it, most firms place a higher priority on growing AUM than on investor returns. It should be noted that there are still some avenues for the fund to continue to grow. Existing investors can continue to add to their account. Individuals who have the fund as an option in their retirement plan can also open new accounts. In addition, there is also a way for investment advisors to continue to put new clients into the fund if it is part of an asset allocation program.

Since my model did not assume a high growth rate in assets the closing of the fund does not impact my projections. My model only assumes about $250 million in new assets per quarter. Based on the size of the firm ($5.5 billion as of the end of May), approximately half of the growth should be from fund performance (assuming average annual returns of 9%), thus the model only assumes about $40 million in new assets per month.

So far today, Diamond Hill has dropped by more than $4 per share, ot $88. We would use any further weakness in the stock to add to our position.