Diamond Hill Capital, an investment management company, released its “Small Cap Fund” second-quarter 2024 investor letter. A copy of the same can be downloaded here. Equity markets reported mixed results in the second quarter of 2024. However, the broad market Russell 3000 Index and the large-cap-focused Russell 1000 Index advanced approximately 3%, most other market segments posted negative returns. Diamond Hill Small Cap Fund slightly trailed its benchmark, the Russell 2000 Index, in Q2 and returned -3.42% while the benchmark return was -3.28% during the same period. For more information on the fund’s top picks in 2024, please check its top five holdings.

Diamond Hill Small Cap Fund highlighted stocks like Magnolia Oil & Gas Corporation (NYSE:MGY), in the second quarter 2024 investor letter. Magnolia Oil & Gas Corporation (NYSE:MGY) is an independent oil and natural gas company. The one-month return of Magnolia Oil & Gas Corporation (NYSE:MGY) was -8.44%, and its shares gained 5.54% of their value over the last 52 weeks. On August 7, 2024, Magnolia Oil & Gas Corporation (NYSE:MGY) stock closed at $23.99 per share with a market capitalization of $4.777 billion.

Diamond Hill Small Cap Fund stated the following regarding Magnolia Oil & Gas Corporation (NYSE:MGY) in its Q2 2024 investor letter:

"We continue finding attractively valued, resilient companies the market is overlooking amid its increasingly narrow focus on the mega-cap technology stocks dominating the major indices. In Q2, we initiated new positions in Magnolia Oil & Gas Corporation (NYSE:MGY), Thermon Group Holdings and Astrana Health.

Aerial view of an oil and natural gas drilling operation on a leasehold position.

Magnolia Oil & Gas Corporation (NYSE:MGY) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Magnolia Oil & Gas Corporation (NYSE:MGY) at the end of the first quarter which was 25 in the previous quarter. In the second quarter, Magnolia Oil & Gas Corporation (NYSE:MGY) reported total GAAP net income attributable to Class A common stock of $96 million and total adjusted net income of $104 million or $0.52 per diluted share. While we acknowledge the potential of Magnolia Oil & Gas Corporation (NYSE:MGY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.