Diamond Hill (NASDAQ: DHIL) to go private in $175-per-share First Eagle deal
Rhea-AI Filing Summary
Diamond Hill Investment Group outlines its asset-management business and a pending sale to First Eagle Investment Management. Under a signed merger agreement, each DHIL common share will be converted into $175.00 in cash, subject to shareholder approval, regulatory clearances, and client-consent thresholds covering at least 78% of revenue run‑rate.
As of December 31, 2025, the company managed $29.4 billion in assets under management and $1.6 billion in assets under advisement, with revenues heavily tied to Proprietary Funds and concentrated strategies such as Large Cap, Long‑Short, and Short Duration Securitized Bond. In 2025, net client cash outflows of $2.7 billion were partially offset by $2.1 billion of market appreciation.
The filing details competitive and regulatory pressures on active managers, operational and cybersecurity controls (including ISO 27001‑certified programs), and extensive merger-related risks, including client consent, integration, litigation, and a potential $18.0 million termination fee if the deal ends under specified circumstances. If completed, DHIL will become a wholly owned, private subsidiary of First Eagle and its shares will be delisted.
Positive
- Transformative cash merger at premium price. DHIL entered a definitive agreement under which each common share will be converted into $175.00 in cash, subject to approvals and conditions, providing shareholders with an agreed all‑cash exit and eliminating public‑market valuation risk if the deal closes.
Negative
- Material net outflows and AUM pressure. For 2025, DHIL recorded net client cash outflows of $2.7 billion against beginning AUM of $30.0 billion, indicating sustained redemption and asset‑pressure despite market appreciation.
- Revenue concentration heightens business risk. Approximately 70% of 2025 revenue came from Proprietary Funds and significant portions from the Diamond Hill Large Cap, Long‑Short, and Short Duration Securitized Bond strategies, making earnings vulnerable to performance or flow setbacks in a few products.
Insights
All‑cash sale at $175 per share reshapes DHIL’s outlook.
Diamond Hill has agreed to merge with First Eagle, with each common share receiving
Closing depends on several conditions, including approval by a majority of outstanding shares, Hart‑Scott‑Rodino clearance, and client consents covering at least
The filing also highlights structural challenges: 2025 net client cash outflows of
Table of Contents
I
United States
Securities and Exchange Commission
Washington, D.C. 20549
Form
(Mark One)concent
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
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(Address of principal executive offices) (Zip Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the registrant’s common shares (the only common equity of the registrant) held by non-affiliates on The Nasdaq Global Select Market was $
As of February 26, 2026, the registrant had
Documents Incorporated by Reference
Portions of the registrant’s definitive Proxy Statement for its 2025 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, are incorporated by reference into Part III of this Annual Report on Form 10-K.
Table of Contents
Diamond Hill Investment Group, Inc.
Form 10-K
For the Fiscal Year Ended December 31, 2025
Index
Required Information |
Page |
Part I |
3 |
Item 1. Business |
3 |
Item 1A. Risk Factors |
10 |
Item 1B. Unresolved Staff Comments |
20 |
Item 1C. Cybersecurity |
20 |
Item 2. Properties |
20 |
Item 3. Legal Proceedings |
20 |
Item 4. Mine Safety Disclosures |
20 |
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Part II |
21 |
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
21 |
Item 6. [Reserved] |
24 |
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 7A. Quantitative and Qualitative Disclosures About Market Risk |
42 |
Item 8. Financial Statements and Supplementary Data |
43 |
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure |
65 |
Item 9A. Controls and Procedures |
65 |
Item 9B. Other Information |
67 |
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
67 |
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Part III |
68 |
Item 10. Directors, Executive Officers and Corporate Governance |
68 |
Item 11. Executive Compensation |
68 |
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters |
68 |
Item 13. Certain Relationships and Related Transactions, and Director Independence |
68 |
Item 14. Principal Accountant Fees and Services |
68 |
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Part IV |
69 |
Item 15. Exhibit and Financial Statement Schedules |
69 |
Item 16. Form 10-K Summary |
71 |
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Signatures |
72 |
2
Table of Contents
PART I
Item 1. Business
Cautionary Note Regarding Forward-Looking Statements
This Annual Report on Form 10-K (this “Form 10-K”), the documents incorporated herein by reference and statements, whether oral or written, made from time to time by representatives of Diamond Hill Investment Group, Inc., an Ohio corporation organized in 1990 (“DHIL”, and collectively with its subsidiaries, the “Company”), may contain or incorporate “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended (the “PSLR Act”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such statements are provided under the “safe harbor” protection of the PSLR Act. Forward-looking statements include, but are not limited to, statements regarding anticipated operating results, prospects and levels of assets under management ("AUM") or assets under advisement ("AUA"), technological developments, economic trends (including interest rates and market volatility), the proposed merger with First Eagle Investment Management, LLC, a Delaware limited liability company ("First Eagle"), other expected transactions and similar matters. The words “may,” “believe,” “expect,” “anticipate,” “target,” “goal,” “project,” “estimate,” “guidance,” “forecast,” “outlook,” “would,” “will,” “continue,” “likely,” “should,” “hope,” “seek,” “plan,” “intend,” and variations of such words and similar expressions identify such forward-looking statements. Similarly, descriptions of the Company’s objectives, strategies, plans, goals, or targets are also forward-looking statements. Forward-looking statements are based on the Company’s expectations at the time such statements are made, speak only as of the dates they are made and are susceptible to a number of risks, uncertainties and other factors. While the Company believes that the assumptions underlying its forward-looking statements are reasonable, investors are cautioned that any of the assumptions could prove to be inaccurate and, accordingly, the Company's actual results and experiences may differ materially from the anticipated results or other expectations expressed in its forward-looking statements.
Factors that could cause the Company’s actual results or experiences to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to: (i) declines or volatility in the Company’s AUM or AUA, whether due to market conditions, investment performance, client withdrawals, asset allocation decisions, or otherwise; (ii) the loss, renegotiation, non-renewal, or termination of investment advisory or administration agreements, including as a result of the proposed merger with First Eagle or client consent related requirements; (iii) risks related to, or the failure to consummate, the proposed merger with First Eagle, including the failure to obtain required approvals or client consents, delays in completion, transaction-related costs, restrictions on operations prior to closing, disruption to business relationships, shareholder litigation, or failure to realize anticipated benefits; (iv) damage to the Company’s reputation or adverse public perception; (v) failure to comply with investment guidelines, fiduciary obligations, regulatory requirements, or other contractual obligations; (vi) intense competition within the investment management industry, including from firms with greater resources or lower-fee or passive investment offerings; (vii) industry trends toward lower fee products, passive strategies, and model portfolio arrangements that may adversely impact revenues; (viii) adverse legal, regulatory, tax, or accounting developments or increased compliance costs; (ix) cybersecurity incidents, technology failures, or disruptions involving the Company or third-party service providers; (x) operational risks, including errors, systems interruptions, employee misconduct, or inadequate risk management controls; (xi) the Company’s ability to adapt to technological change, including the effective and responsible development and use of artificial intelligence (“AI”) and compliance with evolving AI-related regulations; (xii) losses on the Company’s investments or fluctuations in investment income; (xiii) limitations on access to capital or increased costs of financing; (xiv) losses or liabilities not covered by insurance; (xv) adverse changes in interest rates, inflation, credit conditions, or capital markets; (xvi) changes in domestic or global economic, political, or geopolitical conditions, including political uncertainty and economic nationalism; (xvii) the effects of natural disasters, pandemics, or other catastrophic or unpredictable events; and (xviii) other risks and uncertainties described from time to time in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”), including those discussed in Item 1A of this Form 10-K.
Due to the significant uncertainties in forward-looking statements, the inclusion of such information should not be regarded as a representation by the Company or any other person that its expectations, objectives and plans will be achieved. Forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above, in Item 1A of this Form 10-K, and in the Company’s other public documents on file with the SEC. New risks and uncertainties arise from time to time, and factors that the Company currently deems immaterial may become material, and it is impossible for the Company to predict these events or how they may affect it. The Company undertakes no obligation to update any forward-looking statements after the date they are made, whether as a result of new information, future events or developments or otherwise,
3
Table of Contents
except as required by federal securities laws, although it may do so from time to time. Readers are advised to consult any further disclosures the Company makes on related subjects in its public announcements and SEC filings. The Company does not endorse any projections regarding future performance that may be made by third parties.
Overview
DHIL derives its consolidated revenue and net income from investment advisory and fund administration services provided by its wholly-owned subsidiary, Diamond Hill Capital Management, Inc., an Ohio corporation (“DHCM”). DHCM is a registered investment adviser under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and is the investment adviser and administrator for the Diamond Hill Funds, a series of funds (each, a “Diamond Hill Fund”, and collectively, the “Diamond Hill Funds”), including open-end mutual funds and the Diamond Hill Large Cap Concentrated ETF, an exchange-traded fund (“ETF”), and the Diamond Hill Securitized Credit Fund, a closed-end registered investment company (“DHSC”, and collectively with the Diamond Hill Funds, the “Proprietary Funds”). DHCM also provides investment advisory and related services to the Diamond Hill Micro Cap Fund, LP (“DHMF”), a private fund, as well as separately managed accounts (“SMAs”), collective investment trusts (“CITs”), other pooled vehicles including sub-advised funds, and model delivery programs.
The Company believes focusing on generating excellent, long-term investment outcomes and building enduring client partnerships will enable it to grow its intrinsic value to achieve a compelling, long-term return for its shareholders.
The Company accomplishes this through its shared investment principles, including: (i) valuation-disciplined active portfolio management, (ii) fundamental bottom-up research, (iii) a long-term, business-owner mindset, and (iv) a client alignment philosophy that ensures clients’ interests come first. Client alignment is emphasized through: (i) a strategic capacity discipline that protects portfolio managers’ abilities to generate excess returns, (ii) personal investment by portfolio managers in the strategies they manage, (iii) portfolio manager compensation being driven by long-term investment results in client portfolios, and (iv) a fee philosophy focused on a fair sharing of the economics among clients, employees, and shareholders. The Company’s core cultural values of curiosity, ownership, trust, and respect create an environment where investment professionals focus on investment results and all teammates focus on the overall client experience.
The Company offers a variety of investment strategies designed for long-term strategic allocations from institutionally oriented investors in key asset classes, aligning its investment team’s competitive advantages with its clients’ needs.
Proposed Merger with First Eagle Investment Management, LLC
On December 10, 2025, DHIL entered into an Agreement and Plan of Merger (the "Merger Agreement") with First Eagle, and Soar Christopher Holdings, Inc., an Ohio corporation and a wholly-owned subsidiary of First Eagle ("Merger Sub"), pursuant to which, upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into DHIL (the "Merger"), whereupon the separate existence of Merger Sub will cease, and DHIL will be the surviving corporation as a wholly-owned subsidiary of First Eagle.
Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding DHIL common share (including each DHIL restricted share but excluding any DHIL common shares that are held by First Eagle, Merger Sub or any other subsidiary of First Eagle or DHIL or any DHIL common shares as to which appraisal rights have been properly exercised in accordance with Ohio law) will be automatically converted into the right to receive $175.00 in cash, without interest and subject to deduction for any required withholding tax (the “Merger Consideration”).
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Table of Contents
The obligations of the parties to consummate the Merger are subject to the satisfaction or, to the extent permitted, waiver of certain customary closing conditions, including, among others, the adoption of the Merger Agreement by the affirmative vote of a majority of the outstanding DHIL common shares entitled to vote at the DHIL shareholders meeting, the expiration or termination of the waiting period applicable to the consummation of the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and the absence of any order issued by any court of competent jurisdiction or other governmental authority or applicable law prohibiting, rendering illegal or permanently enjoining the consummation of the Merger. The obligations of First Eagle and Merger Sub to consummate the Merger are also subject to the Company obtaining the consent of the Company’s clients generating an aggregate revenue run-rate of at least 78% of the Company’s aggregate revenue run-rate as of November 30, 2025.
The Merger is not subject to a financing condition. First Eagle currently intends to fund the Merger Consideration with a combination of cash on hand and by drawing on all or a portion of one or more credit facilities. Although there can be no assurance that the Merger will be completed, the Company currently expects the Merger to be completed in the second quarter of 2026, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement.
First Eagle is an independent, privately owned investment management firm headquartered in New York, with approximately $181 billion in AUM as of December 31, 2025. First Eagle focuses on active, fundamental, and benchmark-agnostic investing across equity, fixed income, alternative credit, and multi-asset strategies, with a strong emphasis on downside mitigation. Upon completion of the Merger, the Company is expected to continue to operate as a wholly-owned subsidiary of First Eagle.
A special meeting of DHIL shareholders (the “Special Meeting”) is scheduled to be held on March 3, 2026 at which shareholders will be asked to vote upon certain merger-related proposals including, among other matters, the adoption of the Merger Agreement. For additional information regarding First Eagle and the proposed Merger, including detailed information regarding the terms of the Merger Agreement and related matters, see DHIL’s proxy statement filed with the SEC in connection with the Special Meeting.
Additional Information Regarding the Merger
This Form 10-K does not constitute an offer to buy or sell or the solicitation of an offer to buy or sell any securities. In connection with the Merger, on January 28, 2026, DHIL filed with the SEC a definitive proxy statement on Schedule 14A (the “Merger Proxy Statement”) relating to the Special Meeting. This Form 10-K is not a substitute for the Merger Proxy Statement or any other document that DHIL may file with the SEC and send to its shareholders in connection with the Merger. The Merger will be submitted to DHIL’s shareholders for their consideration. Before making any voting decision, DHIL’s shareholders are urged to read all relevant documents filed or to be filed with the SEC, including the Merger Proxy Statement, as well as any amendments or supplements to those documents, when they become available, because they will contain important information about DHIL and the Merger.
DHIL’s shareholders may obtain a free copy of the Merger Proxy Statement, as well as other filings containing information about DHIL, free of charge, at DHIL’s website (www.sec.gov). Copies of the Merger Proxy Statement and other documents filed by DHIL with the SEC may be obtained, without charge, by contacting DHIL through its website at www.diamond-hill.com.
Assets Under Management
DHCM’s principal source of revenue is investment advisory fee income earned from managing client accounts under investment advisory and sub-advisory agreements. The fees earned depend on the type of investment strategy, account size, and servicing requirements. DHCM’s revenues depend largely on the total value and composition of its AUM. Accordingly, net cash flows from clients, market fluctuations, and the composition of AUM impact the Company’s revenues and results of operations.
Model Delivery Programs - Assets Under Advisement
DHCM provides strategy-specific model portfolios to sponsors of model delivery programs. DHCM is paid for its services by the program sponsors at a pre-determined rate based on AUA in the model delivery programs. DHCM does not have discretionary investment authority over individual client accounts in the model delivery programs, and therefore, the AUA is not included in the Company’s AUM.
5
Table of Contents
The Company’s revenues are highly dependent on both the value and composition of AUM and AUA. The following is a summary of the Company’s AUM by product and investment strategy, a roll-forward of the change in AUM, and a summary of AUA for each of the past three years ended December 31, 2025:
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Assets Under Management and Assets Under Advisement |
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As of December 31, |
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(in millions) |
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2025 |
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2024 |
|
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2023 |
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Proprietary Funds |
|
$ |
18,785 |
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$ |
18,097 |
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$ |
15,879 |
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Separately managed accounts |
|
|
5,110 |
|
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|
6,108 |
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6,617 |
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Other pooled vehicles |
|
|
3,746 |
|
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|
3,860 |
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|
|
3,563 |
|
Collective investment trusts |
|
|
1,741 |
|
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|
1,947 |
|
|
|
1,359 |
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Total AUM |
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29,382 |
|
|
|
30,012 |
|
|
|
27,418 |
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Total AUA |
|
|
1,580 |
|
|
|
1,913 |
|
|
|
1,746 |
|
Total AUM and AUA |
|
$ |
30,962 |
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|
$ |
31,925 |
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|
$ |
29,164 |
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Assets Under Management by Investment Strategy |
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As of December 31, |
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(in millions) |
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2025 |
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2024 |
|
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2023 |
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U.S. Equity |
|
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Large Cap |
|
$ |
14,398 |
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$ |
17,702 |
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$ |
17,307 |
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Small-Mid Cap |
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1,374 |
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2,009 |
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2,588 |
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Mid Cap |
|
|
882 |
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1,082 |
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1,023 |
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Select |
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778 |
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|
755 |
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593 |
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Small Cap |
|
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264 |
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|
253 |
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|
|
255 |
|
Large Cap Concentrated |
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190 |
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|
129 |
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|
98 |
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Micro Cap |
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46 |
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|
33 |
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21 |
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Total U.S. Equity |
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17,932 |
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21,963 |
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21,885 |
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Alternatives |
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Long-Short |
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2,344 |
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1,684 |
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1,725 |
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Total Alternatives |
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2,344 |
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1,684 |
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1,725 |
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International Equity |
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International |
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161 |
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141 |
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109 |
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Total International Equity |
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161 |
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141 |
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109 |
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Fixed Income |
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Short Duration Securitized Bond |
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5,064 |
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3,732 |
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1,948 |
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Core Fixed Income |
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3,691 |
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2,416 |
|
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1,735 |
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Securitized Credit |
|
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133 |
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|
52 |
|
|
|
— |
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Securitized Total Return |
|
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31 |
|
|
|
— |
|
|
|
— |
|
Long Duration Treasury |
|
|
26 |
|
|
|
24 |
|
|
|
26 |
|
Total Fixed Income |
|
|
8,945 |
|
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|
6,224 |
|
|
|
3,709 |
|
|
|
|
|
|
|
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Total All Strategies |
|
|
29,382 |
|
|
|
30,012 |
|
|
|
27,428 |
|
(Less: Investments in affiliated funds)(a) |
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
Total AUM |
|
|
29,382 |
|
|
|
30,012 |
|
|
|
27,418 |
|
Total AUA(b) |
|
|
1,580 |
|
|
|
1,913 |
|
|
|
1,746 |
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Total AUM and AUA |
|
$ |
30,962 |
|
|
$ |
31,925 |
|
|
$ |
29,164 |
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6
Table of Contents
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Change in Assets Under Management |
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For the Year |
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(in millions) |
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2025 |
|
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2024 |
|
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2023 |
|
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AUM at beginning of the year |
|
$ |
30,012 |
|
|
$ |
27,418 |
|
|
$ |
24,763 |
|
Net cash inflows (outflows) |
|
|
|
|
|
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|
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Proprietary Funds |
|
|
(613 |
) |
|
|
726 |
|
|
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(599 |
) |
Separately managed accounts |
|
|
(1,341 |
) |
|
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(1,269 |
) |
|
|
(416 |
) |
Collective investment trusts |
|
|
(306 |
) |
|
|
403 |
|
|
|
153 |
|
Other pooled vehicles |
|
|
(481 |
) |
|
|
(149 |
) |
|
|
368 |
|
|
|
|
(2,741 |
) |
|
|
(289 |
) |
|
|
(494 |
) |
Net market appreciation and income |
|
|
2,111 |
|
|
|
2,883 |
|
|
|
3,149 |
|
Increase (decrease) during the year |
|
|
(630 |
) |
|
|
2,594 |
|
|
|
2,655 |
|
AUM at end of the year |
|
|
29,382 |
|
|
|
30,012 |
|
|
|
27,418 |
|
AUA at end of the year |
|
|
1,580 |
|
|
|
1,913 |
|
|
|
1,746 |
|
Total AUM and AUA at end of year |
|
$ |
30,962 |
|
|
$ |
31,925 |
|
|
$ |
29,164 |
|
Capacity
The Company’s ability to retain and grow its AUM has been, and will continue to be, primarily driven by delivering attractive long-term investment results. If the Company determines the size of a strategy could impede its ability to meet its investment objectives, the Company, where possible, may close that strategy to new clients. The Company’s commitment to capacity discipline inherently impacts its ability to grow its AUM as investment results are prioritized over asset accumulation.
The Company’s capacity as of December 31, 2025 was estimated to be $50 billion to $60 billion in domestic equities, $20 billion to $30 billion in international equities, and $50 billion to $70 billion in fixed income. The Company’s capacity increases with the development of new products or strategies.
Growth and Distribution Strategy
The Company’s growth centers first and foremost on delivering an investment and client experience that enables investors to experience better outcomes over the long term. The Company’s client alignment philosophy guides it to develop strategies and offer vehicles that meet clients’ objectives, capitalize on its investment team’s research capabilities, and align with its investment principles.
The Company looks to attract like-minded, long-term focused clients across all of its offerings. To ensure efficient business development and relationship management, the Company has dedicated resources toward content-led marketing and sales enablement efforts. The Company believes that the combination of these efforts will lead to a deeper understanding of its investment strategies, and ultimately, longer holding periods for investors.
As an active investment boutique, the Company brings long-term oriented investment strategies to clients. Each strategy is designed to deliver excellent, long-term investment outcomes. It is imperative that the Company attracts and retains a diversified client base that philosophically aligns with the Company’s investment principles, long-term orientation, and understands the outcomes the Company can provide.
The Company’s distribution team focuses primarily on asset allocators with centralized research teams, allowing it to efficiently deliver services to a large and diversified client base. These asset allocators tend to be highly sophisticated buyers, who conduct deep research and pair the Company’s strategies with complementary strategies to meet holistic client objectives. These asset allocators include centralized research teams at institutional consulting firms, wirehouses, banks, independent broker dealers, and independent registered investment advisory firms. The Company also believes having a focus on plan sponsors with their own investment research teams is important.
The Company’s distribution team members possess a deep understanding of the Company’s clients’ business models and needs. The team takes a consultative, customized approach to developing and maintaining relationships.
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Creating a customized approach requires integrating marketing throughout the sales process and client lifecycle. A proactive, investment content-led marketing effort with a compelling digital ecosystem allows the Company to deliver the right content to the right clients/prospects in the right format at all stages of the client lifecycle.
Distribution technology and business intelligence, including the use of third-party data sets and advanced analytics, provide a solid and scalable foundation for all client interactions. Compiling, centralizing, and analyzing data regarding trends, prospects, purchasing patterns, and engagement informs resource allocation and segmentation of clients, enhancing the effectiveness of the Company’s distribution efforts. The Company’s intention is to deliver investment strategies to clients in the investment vehicle that best meets their unique needs.
Fund Administration Activities
DHCM provides fund administration services to the Proprietary Funds. Fund administration services are broadly defined to include the following services: portfolio and regulatory compliance; treasury and financial oversight; oversight of back-office service providers, such as the custodian, fund accountant, and transfer agent; and general business management and governance of the Proprietary Funds.
Competition
Competition in the investment management industry is intense, and DHCM’s competitors include investment management firms, broker-dealers, banks, and insurance companies, some of whom offer various investment alternatives, including passive index strategies, and strategies that invest in private equity and credit. Many of DHCM’s competitors are better known, offer a broader range of investment products, and have more dedicated resources for business development and marketing.
Regulation
The Company is subject to various federal, state, and non-U.S. laws and regulations. As a matter of public policy, regulatory bodies are charged with safeguarding the integrity of the securities and other financial markets, and with protecting the interests of participants in those markets, including investment advisory clients and shareholders of investment funds. If an adviser fails to comply with these laws and regulations, these regulatory bodies have broad administrative powers, including the power to limit, restrict, or prohibit an investment adviser from carrying on its business. Possible sanctions that regulatory bodies may impose include civil and criminal liability, the suspension of individual employees, limitations on engaging in certain lines of business for specified periods of time, revocation of investment adviser, broker-dealer, and other registrations, censures, and fines.
DHCM is registered with the SEC under the Advisers Act and operates in a highly regulated environment. The Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary duties, recordkeeping requirements, operational requirements, and disclosure obligations. All of the Proprietary Funds are registered with the SEC under the Investment Company Act of 1940, as amended (“Company Act”), and are required to make notice filings with all states where the Proprietary Funds are offered for sale. Virtually all aspects of DHCM’s investment advisory and fund administration business are subject to various federal and state laws and regulations.
DHCM is a fiduciary under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), with respect to benefit plan clients, and therefore, is subject to ERISA regulations. ERISA and applicable provisions of the Internal Revenue Code of 1986, as amended, impose certain duties on persons who are fiduciaries, prohibit certain transactions involving ERISA plan clients, and provide monetary penalties for violations of these prohibitions.
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DHCM’s trading activities for client accounts are regulated by the SEC under the Exchange Act, which includes regulations governing trading on inside information, market manipulation, and a broad number of U.S. trading and market regulation requirements.
The preceding descriptions of the regulatory and statutory provisions applicable to DHCM are not exhaustive or complete and are qualified in their entirety by reference to the respective statutory or regulatory provisions. Failure to comply with these requirements could have a material adverse effect on DHCM’s business.
Contractual Relationships with the Proprietary Funds
DHCM is highly dependent on its contractual relationships with the Proprietary Funds. If any of DHCM’s advisory or administration agreements with the Proprietary Funds were terminated or not renewed, or were amended or modified to reduce fees, DHCM would be materially and adversely affected. DHCM generated approximately 70%, 66%, and 68% of its 2025, 2024, and 2023 revenues, respectively, from its advisory and administration agreements with the Proprietary Funds. DHCM believes that it has strong relationships with the Proprietary Funds and their respective boards of trustees, and DHCM has no reason to believe that these advisory or administration contracts will not be renewed in the future. However, there is no assurance that the Proprietary Funds will choose to continue their relationships with DHCM. Please see Item 1A for risk factors regarding this relationship.
Human Capital
The Company believes its people are its greatest asset, and each role within the firm contributes to its goals of generating excellent, long-term investment outcomes and building enduring client partnerships.
Workforce Data
Attracting, developing, and retaining talented employees is integral to the Company’s human capital strategy and critical to its success. The Company depends on highly skilled personnel, with specialized expertise and extensive experience in the investment management industry. The Company’s overall headcount has remained relatively consistent over the last five years, and was 120 as of December 31, 2025, seven employees fewer than as of December 31, 2024.
The average employee tenure is 9.3 years, and approximately 42.5% of its employees have been with the Company more than 10 years. The Company’s five-year average employee turnover rate is approximately 6.6%. The Company’s employees are based in 9 states, and approximately 85% of its employees reside in Ohio.
As of December 31, 2025, females represented 50% of DHIL’s board of directors (“Board”) and approximately 31% of its employees. As of December 31, 2025, racial or ethnic minorities represented approximately 15% of the Company’s workforce and 12.5% of the Board.
Competitive Pay and Benefits
The Company’s competitive compensation and benefits are designed to help attract, retain, and motivate employees who embody its values. The Company aligns its employees’ compensation with client outcomes, individual and team results, and company performance.
Culture
The Company’s culture emphasizes four key values: curiosity, ownership, trust, and respect. The way its employees embody these core values creates the Company’s culture. The culture allows the Company to attract and retain employees who share its commitment to client alignment, are motivated by investment excellence, and are committed to delivering excellent outcomes. Diversity, equity, and inclusion is embedded in the policies, practices, and strategic initiatives of the Company, ensuring it has teams that encourage varied points of view. The Company believes clients are best served by decision making that engages diverse perspectives.
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The Company's culture manifests itself in a variety of ways. Employees who are curious focus on continuous self-improvement and have a passion for learning. They are open-minded, seek differing perspectives, and go beyond surface-level assumptions. Employees who think and act like business owners naturally embrace a long-term mindset. They lead by example and accept accountability for ensuring strong client outcomes. Employees who embrace trust act with integrity, are authentic and honest in interactions with others, and put client interests ahead of all others. Employees who are motivated by giving and receiving respect communicate and provide feedback candidly, transparently, and with positive intent. They are humble in their assumptions and listen to better understand others. They embrace, value, and celebrate diversity, inclusion, and differences in all forms, and recognize that transparency and accountability are critical to driving real change within the firm, in the industry, and within their community.
The Company’s culture revolves around the fact that DHCM is a fiduciary first and foremost. The primary focus is serving its clients. The Company’s long-term, valuation-disciplined investment principles are foundational to its culture and have been consistently implemented since the firm’s inception. All members of the investment team believe in, and adhere to, the same investment principles. The Company’s employees invest alongside its clients, and portfolio managers have significant personal investments in the strategy or strategies they manage.
SEC Filings
The Company maintains a website at www.diamond-hill.com. The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports that it files or furnishes from time to time pursuant to Section 13(a) or 15(d) of the Exchange Act, are made available free of charge, on or through the Investor Relations section of the Company’s website, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Information contained on the Company’s website is not part of this Form 10-K or any other report or document that it files with, or furnishes to, the SEC. These reports are also available free of charge on the SEC’s website at http://www.sec.gov. References in this Form 10-K to our website and the SEC's website are inactive text references only.
ITEM 1A. Risk Factors
The Company’s future results of operations, financial condition, liquidity, and capital resources as well as the market price of its common shares, are subject to various risks, including those risks described below and elsewhere in this Form 10-K as well as those risks that are discussed from time to time in the Company’s other filings with the SEC. Investors should carefully consider these risks before making an investment decision regarding the Company’s securities. There may be additional risks of which the Company is currently unaware, or of which the Company currently considers to be immaterial. The occurrence of any of these risks could have a material adverse effect on the Company’s financial condition, results of operations, liquidity, capital resources, and the value of its securities. Please see “Forward Looking Statements” within Part I, Item 1, of this Form 10-K.
Risks Related to the Proposed Merger
The announcement of the Merger Agreement and pendency of the Merger could adversely affect the Company's business, financial condition, and results of operations.
In connection with the pending Merger, it is possible that clients, counterparties, vendors, fund boards, and other third parties with whom the Company has relationships may delay, defer, terminate, or renegotiate those relationships as a result of uncertainty regarding the Merger, regardless of whether the Merger is ultimately completed. In addition, current and prospective employees may experience uncertainty regarding future roles and responsibilities, which could adversely affect the Company’s ability to retain and attract key personnel. Any of these factors could negatively impact Company AUM, AUA, revenues, operating results, and cash flows.
The Company's investment advisory relationships are subject to client consent requirements, and failure to obtain required consents could adversely affect the Merger and the Company's business.
Under the Advisers Act, a change in control of an investment adviser generally results in an “assignment” of advisory agreements, requiring client consent. In addition, under the Advisors Act, advisory agreements with registered investment companies require approval by their fund boards and, in some cases, underlying fund shareholders. One of the closing conditions in the Merger Agreement requires the Company to obtain the consent of clients generating an aggregate revenue run-rate of at least 78% of a defined aggregate
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revenue run-rate to the assignment of their respective advisory agreements (resulting from the Merger). Failure to obtain the required client consents or fund approvals could prevent completion of the Merger or result in a reduction of AUM or AUA, even if the Merger is completed, which could materially and adversely affect the Company’s business, financial condition and results of operations.
Failure to complete the Merger could adversely affect the Company and its shareholders.
If the Merger is not consummated for any reason, the Company may experience negative reactions from the capital markets, clients, employees, and other stakeholders, and the market price of DHIL common shares could decline. In addition, the Company would remain subject to certain risks and costs incurred in anticipation of the Merger, including professional fees and management distraction, without realizing any of the anticipated benefits of the transaction. Under certain circumstances specified in the Merger Agreement, DHIL may be required to pay First Eagle a termination fee of $18.0 million if the Merger Agreement is terminated prior to completion of the Merger, including in connection with DHIL’s acceptance of a superior proposal. If the Merger Agreement had been terminated in connection with a superior proposal during the applicable go-shop period, which ended on January 14, 2026, the termination fee would have been $9.0 million. Except in the case of fraud, payment of the termination fee and, if applicable, the costs and expenses of First Eagle and interest on such termination fee and expenses, will be First Eagle’s sole and exclusive remedy for such termination.
Additionally, in approving the Merger Agreement, the Board considered a number of factors and potential benefits, including the fact that the Merger Consideration to be received by holders of DHIL common shares represents a significant premium to the market price prior to the announcement of the Merger. If the Merger is not completed, neither the Company nor the holders of its common shares will realize this benefit of the Merger. Moreover, the Company will have, nevertheless, incurred substantial transaction-related costs and the loss of management time and resources.
The Merger Agreement contains numerous closing conditions that may delay or prevent completion of the Merger.
The Merger Agreement provides that the completion of the Merger is subject to the satisfaction or, to the extent permitted, waiver of customary closing conditions, including, among others, the adoption of the Merger Agreement by the affirmative vote of a majority of the shares of DHIL common stock outstanding and entitled to vote thereon, the expiration or termination of the applicable waiting period under the HSR Act and receipt of the requisite client consents based on revenue run rate. While it is anticipated that the Merger will be consummated by the third quarter of 2026, the closing conditions may not be satisfied in a timely manner or at all, or an effect, event, development, or change could delay or prevent these conditions from being satisfied. Any delay in satisfying these conditions could delay the completion of the Merger or prevent it from being completed at all. Therefore, the timing of the Merger is uncertain and there can be no assurance that the conditions to closing will be satisfied on the expected timeline, or at all.
The Merger Agreement restricts the Company's ability to operate its business or solicit alternative acquisition proposals prior to completion of the Merger.
From the date of execution of the Merger Agreement until completion of the Merger or termination of the Merger Agreement, the Company is subject to certain customary restrictions on its activities, including limitations on capital expenditures, investments, hiring, compensation actions, and other specified activities. These restrictions may prevent the Company from pursuing otherwise attractive business opportunities or responding effectively to market developments prior to completion of the Merger, which could adversely affect the Company’s business and operating results, regardless of whether the Merger is completed. The Company is also subject to customary restrictions on its ability to solicit or engage with third parties on alternative acquisition proposals and the Board’s ability to change its recommendation to shareholders to adopt the Merger Agreement, subject to certain exceptions in accordance with its fiduciary duties.
The Company may be subjected to lawsuits relating to the Merger, which could adversely affect its business, financial condition, and operating results.
The Company and DHIL’s directors and officers may become subject to lawsuits relating to the Merger. Such litigation is very common in connection with mergers and acquisitions of public companies, regardless of the merits of the underlying merger or acquisition.
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While the Company and its legal counsel will evaluate and defend against any actions vigorously, the costs of the defense of such lawsuits and other effects of such litigation could have an adverse effect on the Company’s business, financial condition, and operating results.
Certain directors and executive officers have interests in the Merger that may differ from, or be in addition to, the interests of shareholders.
The Company’s directors and executive officers have interests in the Merger that may differ from, or be in addition to, those of shareholders generally, including, among others, vesting of equity awards, potential severance benefits, and continued indemnification and insurance coverage. These interests may create conflicts of interest in connection with the consideration and approval of the Merger and may influence their actions or recommendations regarding the transaction.
The Company will become a private company following completion of the Merger, which will reduce transparency and eliminate shareholders' ability to participate in future growth.
If the Merger is completed, DHIL common shares will be de-listed from Nasdaq and de-registered under the Exchange Act, and the Company will no longer be required to file periodic reports with the SEC. Former shareholders will no longer have an opportunity to benefit from future appreciation in the value of the Company and will have no voting rights or ability to influence management or corporate governance following completion of the Merger.
The Company may not realize anticipated benefits of the Merger and integration risks may adversely affect the business following completion.
Although the Company expects the Merger to provide strategic and operational benefits to the Company, the realization of these benefits will depend on, among other things, successful integration of the Company into First Eagle’s organization, retention of key investment professionals and clients, and alignment of business practices and systems. Integration efforts may be costly, time-consuming, and disruptive, and management’s attention may be diverted from ongoing operations. If these challenges are not successfully managed, the anticipated benefits of the Merger may not be realized or may be realized more slowly than expected.
The Company has incurred, and expects to continue to incur, substantial transaction costs in connection with the Merger.
In connection with the Merger, the Company has incurred, and expects to continue to incur, significant costs and expenses, including financial advisory, legal, accounting, consulting, other advisory fees and expenses, and other related charges and costs. The Company will not be able to quantify the exact amount of these costs, charges, and expenses or the period in which they will be incurred until after the Merger is completed. While the Company has assumed that a certain level of expenses will be incurred in connection with the Merger, there are many factors that could affect the total amount or timing of any integration and implementation expenses. Some of the factors affecting the costs associated with the Merger include the timing of the completion of the Merger and the resources required for the completion of the Merger. There are also a large number of processes, policies, procedures, operations, technologies, and systems that will be required to be integrated, updated, or developed in connection with the Merger. There may also be additional unanticipated significant costs in connection with the Merger that the Company does not anticipate and may not be able to recoup.
Business Risks
Poor investment results or adverse ratings of the Company’s products could affect its ability to attract new clients or could reduce its AUM, potentially negatively impacting revenue and net income.
If the Company fails to deliver acceptable investment results for its clients, both in the short and long term, the Company could experience diminished investor interest and a decrease in its AUM.
Investment strategies are assessed and rated by independent third parties, including rating agencies, industry analysts, and publications. Investors can be influenced by such ratings. If a Company strategy receives an adverse report, it could negatively impact the Company’s AUM and revenues.
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The Company’s success depends on its key personnel, and its financial performance could be negatively affected by the loss of their services.
The Company’s success depends on highly skilled personnel, including portfolio managers, research analysts, and management, many of whom have specialized expertise and extensive experience in the investment management industry. Financial services professionals are in high demand, and the Company faces significant competition for qualified employees. Other than DHIL’s Chief Executive Officer and President (the "CEO") and DHCM's President and Chief Client Officer, Company employees do not have employment contracts and generally can terminate their employment at any time. The Company may not be able to retain or replace key personnel. To retain or replace its key personnel, the Company may be required to increase compensation, which would decrease its net income. The loss of key personnel could damage the Company’s reputation and make it more difficult to retain and attract new employees and clients. A loss of client assets resulting from the departure of key personnel may materially decrease the Company’s revenues and net income.
The Company’s investment results and/or growth in its AUM may be constrained if appropriate investment opportunities are not available or if the Company closes certain of its investment strategies to new investors.
The Company’s ability to deliver excellent investment results depends in large part on its ability to identify appropriate investment opportunities in which to invest client assets. If the Company is unable to identify sufficient investment opportunities for existing and new client assets on a timely basis, its investment results could be adversely affected. The risk that appropriate investment opportunities may be unavailable is influenced by a number of factors, including general market conditions, and is likely to increase if the Company’s AUM increases rapidly. The Company’s efforts to establish and develop new strategies may face challenges or ultimately be unsuccessful, which could impact its results of operations, reputation, and/or culture. In addition, if the Company determines that sufficient investment opportunities are not available for an investment strategy, or it believes that it is necessary to continue to produce attractive returns from an investment strategy, the Company will consider closing the investment strategy to new investors. If the Company misjudged the point at which it would be optimal to close an investment strategy, the investment results of the strategy could be negatively impacted. The Company has closed investment strategies in the past and may do so again in the future. As of December 31, 2025, the Company does not have any closed investment strategies.
The Company is subject to substantial competition in all aspects of its business, which could reduce its AUM, AUA, revenues, and profitability.
The Company’s investment products compete against investment products and services from:
Many of the Company’s competitors have substantially greater resources and may operate in more markets or offer a broader range of products, including passively managed or “index” products. Some of these institutions operate in a different regulatory environment, which may give them certain competitive advantages in the investment products and portfolio structures that they offer. The Company competes with other providers of investment services primarily based upon its philosophy, performance, and quality of client service. Some institutions have a broader array of products and distribution channels, which makes it more difficult for the Company to compete. If current or potential clients decide to use one of the Company’s competitors, the Company could face a
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significant decline in AUM, AUA, revenues, and net income. If the Company is required to lower its fees to remain competitive, its net income could be significantly reduced because some of the Company’s expenses are fixed, especially over shorter periods of time, and its expenses may not decrease in proportion to the decrease in revenues. Over the past several years, investors have generally shown a preference for passive investment products over actively managed strategies. Additionally, the Company faces increasing competition from ETFs, including low-cost, passively managed ETFs that may be more attractive to certain investors due to their pricing, liquidity, tax efficiency, and ease of trading. Continued growth in ETFs, including actively managed ETFs offered by competitors, could further pressure the Company’s ability to attract and retain assets and may adversely affect its AUM, revenues, and profitability.
Industry trends towards lower fee strategies and model portfolio arrangements could adversely impact the Company’s revenues.
Market and competitive pressures in recent years have created a trend towards lower management fees in the asset management industry and there can be no assurance that the Company will be able to maintain its current fee structure. As a result, a shift in the Company’s AUM from higher to lower fee generating clients and strategies could result in a decrease in revenues even if its AUM increases or remains unchanged. Similarly, in recent years, there has been a trend in clients shifting their assets from higher fee mutual funds and SMAs to lower fee model portfolio arrangements. As a result, a shift in the Company’s client assets from AUM to AUA could result in a decrease in Company revenues.
The loss of access to, or increased fees required by, third-party distribution sources to market the Company’s portfolios and access its client base could adversely affect the Company’s results of operations.
The Company’s ability to attract additional AUM is dependent on its relationship with third-party financial intermediaries. The Company compensates some of these intermediaries for access to investors and for various marketing services provided. These distribution sources and client bases may not continue to be accessible to the Company under reasonable terms, or at all. If such investor access is restricted or eliminated, it could have an adverse effect on the Company’s results of operations. Fees paid to financial intermediaries for investor access and marketing services have generally increased in recent years. Any loss of access to, or increase in fees required by, third-party distribution sources could also negatively impact client inflows, increase client outflows, or otherwise disrupt the Company’s ability to raise and retain AUM, which could further adversely affect its results of operations.
A significant portion of DHCM’s revenues is concentrated in a limited number of strategies, particularly the Diamond Hill Large Cap strategy, and declines in AUM, investment performance, or client flows could materially and adversely affect the Company's results.
A substantial portion of DHCM’s revenues is derived from advisory and administration agreements with a limited number of strategies. During 2025, advisory contracts with the Diamond Hill Large Cap strategy, Diamond Hill Long-Short strategy, and Diamond Hill Short Duration Securitized Bond strategy represented approximately 50%, 12%, and 10% of total revenues, respectively, with the Diamond Hill Large Cap Fund representing the single largest source of revenue.
As a result of this concentration, DHCM is particularly exposed to changes in AUM, relative investment performance, and net client flows within these funds and strategies. As discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” DHCM has experienced sustained net outflows in its Large Cap strategy, driven by a combination of client rebalancing activity, asset allocation shifts, and relative investment performance. Continued underperformance, elevated net redemptions, or declines in Large Cap AUM could materially reduce advisory fee revenue and negatively impact operating results.
Although DHCM seeks to diversify its asset base across strategies and client channels, there can be no assurance that growth in other strategies or favorable market conditions will be sufficient to offset declines in Large Cap or other concentrated revenue sources. Any material reduction in AUM or revenues associated with the Diamond Hill Large Cap Fund or other significant Proprietary Funds would have a material adverse effect on DHCM’s business, results of operations, and financial condition.
A significant portion of DHCM's revenues are based on advisory and administration agreements with the Proprietary Funds that are subject to termination without cause and on short notice.
DHCM generated approximately 70%, 66%, and 68% of its revenues during 2025, 2024, and 2023, respectively, from advisory and administration agreements with the Proprietary Funds. DHCM’s advisory and administration agreements with the Proprietary Funds are
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generally terminable by either party upon 60 days’ prior written notice without penalty and are subject to annual approval by the applicable board of trustees or by a vote of the majority of the outstanding voting securities of each Proprietary Fund. In addition, these agreements automatically terminate upon an assignment by either DHCM or the applicable Proprietary Fund, which would occur at the effective time of the Merger if the closing of the Merger occurs.
The Proprietary Funds are not obligated to renew these agreements on their current terms, if at all, and may seek to renegotiate fees or other contractual provisions. The decision to renew or terminate an advisory or administration agreement may be influenced by a variety of factors, including investment performance, AUM, fee levels, regulatory considerations, and competitive alternatives.
The loss, non-renewal, or modification of any advisory or administration agreement with a Proprietary Fund—particularly the Diamond Hill Large Cap Fund, Diamond Hill Long-Short Fund, or Diamond Hill Short Duration Securitized Bond Fund—could materially reduce DHCM’s revenues and could have a material adverse effect on its results of operations and financial condition. There can be no assurance that the Proprietary Funds will continue their contractual relationships with DHCM on current terms, or at all. For additional information, see the respective proxy statements of the Proprietary Funds seeking fund shareholder approval of the assignment of the fund investment management agreements with DHCM.
Negative public opinion of the Company could impair its reputation, cause it to lose clients and adversely affect its share price.
Negative public opinion can result from the Company’s actual or alleged conduct in any number of activities, including trading practices, corporate governance and acquisitions, diversity, equity and inclusion issues, social media and other marketing activities, and actions taken by governmental regulators and community organizations in response to any of the foregoing. Negative public opinion could adversely affect the Company’s ability to attract and maintain clients, could expose the Company to potential litigation or regulatory action, and could have a material adverse effect on its share price or result in heightened volatility as well as on its revenues and results of operations.
Operational Risks
Cybersecurity attacks could prevent the Company from managing client portfolios, cause the unauthorized disclosure of sensitive or confidential client or employee information or result in misappropriation of information or funds, each of which could severely harm its business.
In the ordinary course of its business, the Company collects, processes, and transmits sensitive and confidential information about its clients and employees, as well as proprietary information about its business. The Company has policies and procedures pursuant to which it takes numerous security measures to prevent cyberattacks of various kinds as well as fraudulent and inadvertent activity by persons who have been granted access to such sensitive or confidential information. Nevertheless, the Company’s systems, like all technology systems, remain vulnerable to unauthorized access, which can result in theft or corruption of information. In addition, the Company shares information with third-party vendors upon whom it relies for various functions. The systems of such third parties also are vulnerable to cyber threats. Unauthorized access can come from unrelated third parties through the internet, from access to hardware removed from the Company’s or those third parties’ premises, or from employees acting intentionally or inadvertently.
Cybersecurity incidents can involve, among other things: (i) deliberate attacks designed to corrupt the Company’s information systems and make them unusable by the Company to operate its business; (ii) theft of information used by the perpetrators for financial and other gain; or (iii) inadvertent releases of information by employees or third parties with whom the Company does business.
Cyberattacks that corrupt the Company’s information systems and make them unusable could impair its ability to trade securities in its clients’ accounts. Corruption of the systems of the Company’s third-party vendors could impact the Company to the same extent as corruption of its own systems. If information about the Company’s employees or clients is intentionally stolen or inadvertently made public, that information could be used to commit identity theft, obtain credit in an employee’s or client’s name, or steal from an employee or client. If information about the Company’s business is obtained by unauthorized persons, whether through intentional attacks or inadvertent releases of information, it could be used to harm its competitive position.
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Whether information is corrupted, stolen, or inadvertently disclosed, and regardless of the type and nature of the information (e.g., proprietary information about the Company’s business or personal information about clients or employees), it could have various adverse impacts on, and be materially harmful to, the Company, including the following:
Any of the above potential impacts of a cybersecurity incident, individually or collectively, could have a material adverse effect on the Company’s business, financial condition, and results of operations.
Failure to keep pace with technological change could impair the Company’s competitiveness and growth.
The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve clients while reducing costs. The Company’s future success depends, in part, upon its ability to address client needs by using technology to provide products and services that will satisfy client demands, as well as to create additional efficiencies in its operations. The Company may not be able to implement effectively new technology-driven products and services or be successful in marketing these products and services to its clients. Failure to successfully keep pace with technological changes affecting the financial services industry could negatively affect the Company’s growth, revenue, and profit.
The Company operates in an intensely competitive business environment. It may not be as successful as its competitors incorporating AI into its business or adapting to a rapidly changing marketplace which could harm its competitive positions and profitability.
The Company operates in an intensely competitive environment, and many competitors are investing heavily in AI and related technologies. The Company’s competitors may be larger, more diversified, better funded, and have access to more advanced technology, including generative AI. These competitive advantages may enable the Company's competition to innovate better and more quickly, or to compete more effectively on quality and price, which could cause the Company to lose business and profitability. Burgeoning interest in AI may increase competition and disrupt the Company’s business model. AI may lower barriers to entry in the industry and the Company may be unable to effectively compete with the products or services offered by new competitors. AI-related changes to the products and services on offer may affect customer expectations, requirements, or tastes in ways that the Company cannot adequately anticipate or adapt to, causing its business to lose revenues, market share, or the ability to operate profitably and sustainably.
Failure to effectively manage AI-related risks in an evolving regulatory environment could have an adverse effect on the Company’s growth, reputation, and business.
The Company uses machine learning and AI in its business and expects to continue to expand its AI capabilities, including through generative AI. AI methods are complex and rapidly evolving, and the introduction of AI into new or existing processes may result in
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new or enhanced governmental or regulatory scrutiny, intellectual property or other litigation, data protection, confidentiality or information security risks, social or ethical concerns, competitive harm or other complications. AI technologies are still being developed and have not been fully addressed by U.S. courts or federal or state laws or regulation. Furthermore, regulatory scrutiny of AI technologies and controls continues to evolve globally with new and forthcoming laws and regulations. Efforts around use of these technologies require additional investment in operational controls and procedures, development and implementation of appropriate protections and safeguards for handling the use of data with AI, including with respect to data leakage, fraud prevention and regulatory compliance costs. AI technologies may also disrupt the competitive landscape for investment management and technology services, including in commercial and operational areas such as data aggregation and quantitative models. Any failure to successfully integrate AI technologies, respond to client or market demands, accurately communicate AI initiatives, comply with AI-related regulations, identify or address any legal or regulatory issues associated with AI or effectively manage the related risks could harm the Company’s growth and reputation, adversely impact product offerings, client interactions or business initiatives, and expose the Company to legal and regulatory liabilities and additional costs, including regulatory fines or sanctions, which may cause its AUM, revenue and earnings to decline.
Operational risks may disrupt the Company’s business, result in losses, or limit its growth.
The Company is dependent on the capacity and reliability of the communications, information, and technology systems supporting its operations, whether developed, owned, or operated internally by the Company or by third parties. Operational risks, such as trading or operational errors, interruption of the Company’s financial, accounting, trading, compliance, and other data processing systems, the loss of data contained in such systems, or compromised systems due to cyberattack, could result in a disruption of the Company’s business, liability to clients, regulatory intervention, or reputational damage, and thus, adversely affect its business.
Employee misconduct could harm the Company by impairing its ability to attract and retain clients and subjecting the Company to significant legal liability, regulatory scrutiny, and reputational harm.
The Company’s controls and procedures may fail or be circumvented, its risk management policies and procedures may be inadequate and operational risks could adversely affect its reputation and financial condition.
The Company has developed and continues to update strategies and procedures specific to its business for managing risks, which include market risk, liquidity risk, operational risk, and reputational risk. Management of these risks can be very complex. These strategies and procedures may fail under some circumstances, particularly if the Company is confronted with risks that it has underestimated or not identified. Some of the Company’s risk evaluation methods depend upon information provided by others and public information regarding markets, clients, or other matters that are otherwise accessible by the Company. If the Company’s policies and procedures are not fully effective or it is not successful in capturing all risks to which it is or may be exposed, the Company may suffer harm to its reputation or be subject to litigation or regulatory actions that could have a material adverse effect on its business, results of operations, or financial condition.
Industry, Market, and Economic Risks
The Company’s AUM, which impacts revenue, is subject to significant fluctuations.
The majority of the Company’s revenue is calculated as a percentage of AUM or is related to the general performance of the equity securities markets. A decline in securities prices or in the sale of investment products, or an increase in client redemptions, generally will reduce revenue and net income. Financial market declines will generally negatively impact the level of the Company’s AUM, and consequently, its revenue and net income. A recession or other economic or political events, whether in the U.S. or globally could also adversely impact the Company’s revenue, if such events led to a decreased demand for products, a higher redemption rate, or a decline in securities prices. Investor interest in the Company’s fixed income strategies is affected by changes in interest rates and the overall credit environment. In addition, the majority of the Company’s existing AUM is managed in primarily long-only, equity investment strategies, which exposes it to greater risk than certain of its competitors who may manage assets in more diverse strategies.
17
Table of Contents
The Company’s investment approach may underperform other investment approaches during certain market conditions, which could lead to client outflows and reduced revenues.
The Company’s investment strategies are best suited for investors with long-term investment time horizons. The Company’s investment strategies may not perform well during certain periods of time. Additionally, the Company has, and is expected to continue to have, common positions and industry concentrations across its strategies at the same time. As such, factors leading to underperformance may impact multiple strategies simultaneously.
The Company’s investment income and asset levels may be negatively impacted by fluctuations in its investment portfolio.
The Company currently has a substantial portion of its assets invested in investment strategies that it manages. All of these investments are subject to market risk and the Company’s non-operating investment income could be adversely affected by market performance. Fluctuations in investment income are expected to occur in the future and may adversely affect the Company's financial condition and results of operations.
Trading in DHIL common shares is limited, which may adversely affect the time and the price at which shareholders can sell their shares.
Although DHIL common shares are listed on The Nasdaq Global Select Market, the shares are held by a relatively small number of shareholders, and trading in its common shares has historically been relatively inactive. Certain shareholders, including certain of the Company’s directors and officers, own a significant number of shares. The spread between the bid and the ask prices is often wide. As a result, shareholders may not be able to sell their shares on short notice, and the sale of a large number of shares at one time could temporarily depress the market price.
Regulatory Risks
Changes in tax laws and unanticipated tax obligations could have an adverse impact on the Company’s financial condition, results of operations, and cash flow.
The Company is subject to federal, state, and local income taxes in the U.S. The Company cannot predict future changes in the tax regulations to which it may be subject, and any such changes could have a material impact on its tax liability or result in increased costs of its tax compliance efforts. Tax authorities may disagree with certain positions that the Company has taken or may implement changes in tax policy, which may result in the assessment of additional taxes on the Company. The Company regularly assesses the appropriateness of its tax positions and reporting. The Company cannot provide assurances, however, that tax authorities will agree with the positions it has taken, or that the Company will accurately predict the outcomes of audits, and the actual outcomes of these audits could be unfavorable.
18
Table of Contents
The Company is subject to extensive governmental regulation, which can change frequently and may increase costs of compliance, reduce revenue, result in fines, penalties, and lawsuits for noncompliance, and adversely affect its results of operations and financial condition.
The Company is subject to a variety of federal securities laws, including the Advisers Act, the Company Act, the Securities Act, the Exchange Act, the Sarbanes-Oxley Act of 2002, the U.S. PATRIOT Act of 2001, and the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, each as amended. In addition, the Company is subject to significant regulation and oversight by the SEC. Changes in legal, regulatory, accounting, tax, and compliance requirements could have a significant effect on the Company’s operations and results, including, but not limited to, increased expenses and reduced investor interest in certain funds and other investment products that the Company offers. The Company continually monitors legislative, tax, regulatory, accounting, and compliance developments that could impact its business. The Company and its directors, officers, and employees could be subject to lawsuits or regulatory proceedings for violations of such laws and regulations, which could result in the payment of fines or penalties and cause reputational harm to the Company, which could negatively affect its financial condition and results of operations, as well as divert management’s attention from its operations.
General Risk Factors
The Company’s insurance policies may not cover all losses and costs to which it may be exposed.
The Company carries insurance in amounts and under terms that it believes are appropriate. The Company’s insurance may not cover all liabilities and losses to which it may be exposed. Certain insurance coverage may not be available or may be prohibitively expensive in future periods. As the Company’s insurance policies come up for renewal, it may need to assume higher deductibles or pay higher premiums, which could have an adverse impact on its results of operations and financial condition.
Natural disasters, global pandemics, and other unpredictable events could adversely affect the Company’s operations and financial results.
Natural disasters, outbreaks of epidemics or pandemics, terrorist attacks, extreme weather events, or other unpredictable events could adversely affect the Company’s revenues, expenses, and net income by:
The Company has developed various backup systems and contingency plans but cannot be assured that those preparations will be adequate in all circumstances that could arise, or that material interruptions and disruptions will not occur. The Company also relies to varying degrees on outside vendors for service delivery in addition to technology and disaster contingency support. There is a risk that these vendors will not be able to perform in an adequate and timely manner. If the Company’s operations or its employees’ ability to perform their duties is temporarily disrupted, or if the Company is unable to respond adequately to such an event in a timely manner, revenues, expenses, and net income could be negatively impacted.
19
Table of Contents
ITEM 1B. Unresolved Staff Comments
None.
ITEM 1C. Cybersecurity
The Company is subject to several material risks related to cybersecurity threats. A cybersecurity attack could prevent the Company from managing client portfolios, cause the unauthorized disclosure of sensitive or confidential client or employee information, and/or result in misappropriation of information or funds, which individually or collectively could severely harm its business.
ITEM 2. Properties
The Company leases office space and conducts its general operations at one location, the address of which is 325 John H. McConnell Boulevard, Suite 200, Columbus, Ohio 43215. The Company does not own any real estate or interests in real estate.
ITEM 3. Legal Proceedings
The Company is not aware of any pending legal proceedings that the Company believes will have, individually or in the aggregate, a material adverse effect on its consolidated financial statements.
ITEM 4. Mine Safety Disclosures
Not applicable.
20
Table of Contents
PART II
ITEM 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
The following performance graph compares the cumulative total shareholder return of an investment in DHIL common shares to that of the Russell 2000 Index and the Russell 2000 Asset Managers & Custodians Index (the “R2000 A&C Index”) for the five-year period ended December 31, 2025. The graph assumes that the value of the investment in DHIL common shares and each index was $100 on December 31, 2020. Total return includes reinvestment of all dividends. The Russell 2000 Index measures the performance of approximately 2,000 small-cap U.S. equities, and was selected as a broad equity market index comprised of companies with comparable market capitalization to DHIL. The R2000 A&C Index is comprised of the Asset Managers & Custodians subsector of the Russell 2000 Index, and provides a comparison to companies with comparable market capitalization to DHIL that operate in the same industry as the Company. The historical information set forth below is not necessarily indicative of future performance. The Company does not make or endorse any predictions as to future share performance. This performance graph shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or incorporated by reference into any of our other filings under the Securities Act or the Exchange Act.
|
12/31/2020 |
|
|
12/31/2021 |
|
|
12/31/2022 |
|
|
12/31/2023 |
|
|
12/31/2024 |
|
|
12/31/2025 |
|
|
Cumulative 5 |
|
|||||||
Diamond Hill Investment Group, Inc. |
$ |
100 |
|
|
$ |
146 |
|
|
$ |
146 |
|
|
$ |
136 |
|
|
$ |
132 |
|
|
$ |
153 |
|
|
|
53 |
% |
Russell 2000 Index |
$ |
100 |
|
|
$ |
115 |
|
|
$ |
91 |
|
|
$ |
107 |
|
|
$ |
119 |
|
|
$ |
134 |
|
|
|
34 |
% |
Russell 2000 Asset Managers & |
$ |
100 |
|
|
$ |
127 |
|
|
$ |
99 |
|
|
$ |
136 |
|
|
$ |
178 |
|
|
$ |
177 |
|
|
|
77 |
% |
21
Table of Contents
|
2021 |
|
2022 |
|
2023 |
|
2024 |
|
2025 |
|
|
|
|
|
|
|
|
|
|
|
Arlington Asset Investment Corp. |
|
Associated Capital Group, Inc. |
|
Associated Capital Group, Inc. |
|
AlTi Global, Inc. |
|
Acadian Asset Management., Inc. |
|
|
|
|
|
|
|
|
|
|
|
Associated Capital Group, Inc. |
|
AssetMark Financial Holdings, Inc. |
|
AlTi Global, Inc. |
|
AssetMark Financial Holdings, Inc. |
|
AlTi Global, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
AssetMark Financial Holdings, Inc. |
|
Artisan Partners Asset Management, Inc. |
|
AssetMark Financial Holdings, Inc. |
|
Artisan Partners Asset Management, Inc. |
|
Artisan Partners Asset Management, Inc. |
|
|
|
|
|
|
|
|
|
|
|
Artisan Partners Asset Management, Inc. |
|
Blucora, Inc. |
|
Artisan Partners Asset Management, Inc. |
|
BrightSphere Investment Group Inc |
|
Brookfield Business Corp. |
|
|
|
|
|
|
|
|
|
|
|
Blucora, Inc. |
|
Brookfield Business Corp. |
|
Avantax, Inc. |
|
Brookfield Business Corp. |
|
Burford Capital Limited
|
|
|
|
|
|
|
|
|
|
|
|
BrightSphere Investment Group, Inc. |
|
BrightSphere Investment Group, Inc. |
|
Brookfield Business Corp. |
|
Burford Capital Limited |
|
Cohen & Steers, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Cohen & Steers, Inc. |
|
Cohen & Steers, Inc. |
|
BrightSphere Investment Group, Inc. |
|
Cohen & Steers, Inc. |
|
Diamond Hill Investment Group, Inc. |
|
|
|
|
|
|
|
|
|
|
|
Cowen Inc |
|
Diamond Hill Investment Group, Inc. |
|
Cohen & Steers, Inc. |
|
Diamond Hill Investment Group, Inc. |
|
GCM Grosvenor, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Diamond Hill Investment Group, Inc. |
|
Federated Hermes, Inc. |
|
Diamond Hill Investment Group, Inc. |
|
GCM Grosvenor, Inc. |
|
Hamilton Lane Incorporated |
|
|
|
|
|
|
|
|
|
|
|
Federated Hermes, Inc. |
|
Focus Financial Partners, Inc. |
|
Federated Hermes, Inc. |
|
Hamilton Lane Incorporated |
|
P10, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Focus Financial Partners, Inc. |
|
GAMCO Investors, Inc. |
|
Focus Financial Partners, Inc. |
|
Patria Investments Ltd. |
|
Patria Investments Ltd.
|
|
|
|
|
|
|
|
|
|
|
|
GAMCO Investors, Inc. |
|
GCM Grosvenor, Inc. |
|
GCM Grosvenor, Inc. |
|
PJT Partners, Inc. |
|
Perella Weinberg Partners |
|
|
|
|
|
|
|
|
|
|
|
GCM Grosvenor, Inc. |
|
Greenhill & Co., Inc. |
|
Hamilton Lane Incorporated |
|
Perella Weinberg Partners |
|
PJT Partners, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Greenhill & Co., Inc. |
|
Hamilton Lane Incorporated |
|
Oppenheimer Holdings Inc. |
|
P10, Inc. |
|
Silvercrest Asset Management Group Inc. |
|
|
|
|
|
|
|
|
|
|
|
Hamilton Lane Incorporated |
|
Manning & Napier, Inc. |
|
Patria Investments Ltd. |
|
Silvercrest Asset Management Group Inc. |
|
StepStone Group, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
MMA Capital Holdings, Inc. |
|
Oppenheimer Holdings Inc. |
|
PJT Partners, Inc. |
|
StepStone Group, Inc. |
|
Victory Capital Holdings, Inc. |
|
|
|
|
|
|
|
|
|
|
|
Oppenheimer Holdings Inc. |
|
PJT Partners, Inc. |
|
Perella Weinberg Partners |
|
Victory Capital Holdings, Inc. |
|
Virtus Investment Partners, Inc. |
|
|
|
|
|
|
|
|
|
|
|
PJT Partners, Inc. |
|
Perella Weinberg Partners |
|
P10, Inc. |
|
Virtus Investment Partners, Inc. |
|
Westwood Holdings Group, Inc. |
|
|
|
|
|
|
|
|
|
|
|
Pzena Investment Management, Inc. |
|
Pzena Investment Management, Inc. |
|
Silvercrest Asset Management Group Inc. |
|
WisdomTree, Inc. |
|
WisdomTree, Inc.
|
|
|
|
|
|
|
|
|
|
|
|
Silvercrest Asset Management Group Inc. |
|
Silvercrest Asset Management Group Inc. |
|
Sculptor Capital Management, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sculptor Capital Management, Inc. |
|
Sculptor Capital Management, Inc. |
|
StepStone Group, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
StepStone Group, Inc. |
|
StepStone Group, Inc. |
|
Victory Capital Holdings, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Virtus Investment Partners, Inc. |
|
Victory Capital Holdings, Inc. |
|
Virtus Investment Partners, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waddell & Reed Financial, Inc. |
|
Virtus Investment Partners, Inc. |
|
WisdomTree, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westwood Holdings Group, Inc. |
|
WisdomTree, Inc. |
|
|
|
|
|
|
|
WisdomTree Investments, Inc. |
|
|
|
|
|
|
|
|
22
Table of Contents
DHIL’s common shares trade on The Nasdaq Global Select Market under the ticker symbol DHIL. The following table sets forth the high and low daily close prices during each quarter of 2025 and 2024:
|
2025 |
|
|
2024 |
|
||||||||||||||||||
|
High |
|
|
Low |
|
|
Quarterly |
|
|
High |
|
|
Low |
|
|
Quarterly |
|
||||||
|
Price |
|
|
Price |
|
|
Per Share |
|
|
Price |
|
|
Price |
|
|
Per Share |
|
||||||
Quarter ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
March 31 |
$ |
156.59 |
|
|
$ |
142.84 |
|
|
$ |
1.50 |
|
|
$ |
166.53 |
|
|
$ |
144.68 |
|
|
$ |
1.50 |
|
June 30 |
$ |
145.80 |
|
|
$ |
125.49 |
|
|
$ |
1.50 |
|
|
$ |
159.18 |
|
|
$ |
138.79 |
|
|
$ |
1.50 |
|
September 30 |
$ |
158.38 |
|
|
$ |
133.40 |
|
|
$ |
1.50 |
|
|
$ |
163.24 |
|
|
$ |
139.35 |
|
|
$ |
1.50 |
|
December 31 |
$ |
170.00 |
|
|
$ |
114.83 |
|
|
$ |
5.50 |
|
|
$ |
171.89 |
|
|
$ |
150.15 |
|
|
$ |
1.50 |
|
Due to the relatively low trading volume of DHIL’s common shares, bid/ask spreads can be wide at times, and therefore, quoted prices may not be indicative of the price a shareholder may receive in an actual transaction. During 2025 and 2024, approximately 7,130,745 and 4,335,746, of DHIL’s common shares were traded, respectively.
The approximate number of record holders of DHIL common shares as of February 26, 2026 was 70. The approximate number of beneficial holders of DHIL common shares held by brokers, banks, and other intermediaries was approximately 10,750 as of December 31, 2025.
During 2025, DHIL paid a quarterly cash dividend of $1.50 per common share and a special dividend of $4.00 per common share in the fourth quarter. Pursuant to the Merger Agreement, DHIL will not pay a dividend pending the closing of the Merger.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
The following table sets forth information regarding repurchases of DHIL common shares during the quarter ended December 31, 2025:
Period |
|
Total Number of |
|
|
Average Price |
|
|
Total Number |
|
|
Approximate Dollar |
|
||||
October 1, 2025 through October 31, 2025 |
|
|
17,864 |
|
|
$ |
138.90 |
|
|
|
17,177 |
|
|
$ |
24,571,801 |
|
November 1, 2025 through November 30, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
24,571,801 |
|
December 1, 2025 through December 31, 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
24,571,801 |
|
Total |
|
|
17,864 |
|
|
$ |
138.90 |
|
|
|
17,177 |
|
|
$ |
24,571,801 |
|
In connection with the 2024 Repurchase Program, DHIL entered into a Rule 10b5-1 trading arrangement. The Rule 10b5-1 trading arrangement is intended to qualify for the safe harbor under Rule 10b5-1 of the Exchange Act. A Rule 10b5-1 trading arrangement allows a company to purchase its stock at times when it would not ordinarily be in the market because of its trading policies or the possession of material nonpublic information. Because repurchases under DHIL’s Rule 10b5-1 trading arrangement are subject to specified parameters and certain price, timing, and volume restraints specified in the plan, there is no guarantee as to the exact number of common shares that will be repurchased or that there will be any repurchases at all pursuant to the plan. Purchases under the 2024 Repurchase Program may be made in the open market or through privately negotiated transactions. Purchases in the open market are intended to comply with Rule 10b-18 under the Exchange Act. In accordance with the Merger Agreement, DHIL will not repurchase its common shares under the 2024 Repurchase Program pending the closing of the Merger.
23
Table of Contents
Sale of Unregistered Securities
During the quarter ended December 31, 2025, DHIL did not sell any common shares that were not registered under the Securities Act.
ITEM 6. [Reserved]
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
In this Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), the Company discusses and analyzes its consolidated results of operations for the past three fiscal years and other factors that may affect its future financial performance. This discussion should be read in conjunction with the Company’s consolidated financial statements and notes to consolidated financial statements contained in this Form 10-K.
Certain statements the Company makes under this MD&A constitute “forward-looking statements” under the PSLR Act. See “Cautionary Note Regarding Forward-Looking Statements” in Part I, Item 1. You should also consider the Company’s forward-looking statements in light of the risks discussed in Part I, Item 1A, as well as the Company’s consolidated financial statements, related notes and other financial information appearing elsewhere in this Form 10-K and its other filings with the SEC.
Business Environment1
The performances of the U.S. and international equity markets, as well as the U.S. fixed income market, has a direct impact on the Company’s operations and financial position. Returns of several major equity and fixed income market indexes for 2025 were as follows:
|
|
2025 |
|
|
Russell 1000 Index |
|
|
17.37 |
% |
Russell 2000 Index |
|
|
12.81 |
% |
Russell 3000 Index |
|
|
17.15 |
% |
MSCI ACWI ex USA Index |
|
|
32.39 |
% |
Bloomberg Barclays U.S. Aggregate Index |
|
|
7.30 |
% |
Bloomberg Barclays U.S. 1-3 Yr. Gov./Credit Index |
|
|
5.35 |
% |
Equity Market Conditions
The U.S. equity markets experienced gains in 2025. The Russell 3000 Index rose 17.15%, driven by large-cap stocks rising 17.37%, while mid-cap stocks gained 10.60% and small-cap stocks increased 12.81%.
Growth stocks outperformed value stocks for the third consecutive year, continuing the trend observed for most of the last decade. The Russell 1000 Growth Index (R1000G) returned 18.56%, exceeding the Russell 1000 Value Index (R1000V) by 2.65%, percentage points (15.91%). While growth stocks were still ahead, this difference was significantly less than in each of the prior two years. The performance gap was similarly narrower in smaller capitalization stocks, with the Russell 2000 Growth Index outperforming the Russell 2000 Value Index by less than a percentage point.
The MSCI ACWI ex-U.S. Index increased 32.39% in 2025, marking a third consecutive year of gains and for the first time since 2022, outperformed U.S. Equity markets.
1 All net asset and flow data stated in this MD&A are sourced from Morningstar, Inc. © 2025/2026 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is not a guarantee of future results.
24
Table of Contents
Fixed Income Market Conditions
The Bloomberg U.S. Aggregate Bond index returned 7.30% during 2025, the best annual performance for the index since 2020.
After lowering the federal funds rate by 100 basis points in 2024 the Board of Governors of the Federal Reserve System cut rates three times in 2025 for a total decrease of 75 basis points. Inflation ended the year slightly lower at 2.6% compared to year end 2024 at 2.9%.
The 2-year Treasury yield fell 77 basis points during the year from 4.25% to 3.48% while the 30-year Treasury yield increased 6.2 basis points from 4.78% to 4.84%, pushing the spread between the two to 137 basis points, the highest level since 2021.
Investment Flows and Market Trends
Total mutual fund and ETF inflows reached $765 billion in 2025, the second-highest annual inflow recorded in the past 25 years. Passively managed strategies accounted for $951 billion in inflows, while actively managed funds experienced $186 billion in outflows. Investors allocated $1.5 trillion to ETFs, while mutual funds saw $693 billion in outflows, continuing a multi-year trend of preference for ETFs.
Within U.S. equities, the share of actively managed fund assets has declined from 47% in 2020 to 35% in 2025. Large-cap ETFs received $556 billion in inflows, while large-cap mutual funds saw $448 billion in outflows.
International equity funds brought in $57 billion, the highest amount of inflows since 2021, following stronger relative returns of international equities compared to U.S. stocks.
In fixed income, taxable bond funds had a record $541 billion in inflows, which represented over 70% of total mutual fund and ETF flows. The conservative Ultrashort Bond category took in $105 billion of these flows reflecting investor’s fears of inflation and market volatility.
The market for actively managed ETFs continued to expand with hundreds of new products introduced and multiple mutual funds converted into ETFs. Active ETFs brought in $453 billion in inflows, representing 45% of total ETF flows, a significant increase from prior years.
Shifts in Investment Vehicles and Distribution
Investment vehicle preferences continued to change, with increased use of SMAs and model delivery programs. These options offer tax efficiency and customization, leading to broader adoption among institutional and high-net-worth investors.
Other investment structures, such as closed-end registered investment companies, CITs, private funds, and other pooled vehicles, remain relevant. Private market allocations within both retail and institutional investor portfolios have continued to grow.
Investment Results
It is imperative that the Company generate strong long-term investment results. Strong investment performance is the key driver of long-term success and meaningfully influences the Company’s ability to attract and retain clients.
The equity strategies offered by the Company have generally tended to deliver attractive absolute returns, but the market environment over the last few years has made relative performance more challenging. Trailing returns presented in the format below tend to be highly end-point sensitive, which means short periods of sharp underperformance can weigh on a strategy’s long-term track record. Because the Large Cap Composite represents 49% of Firm assets, its recent underperformance in the second half of 2025 has had a significant impact on several rows in the summary table below.
25
Table of Contents
Below is a summary of the performance of the Proprietary Funds compared to their respective Morningstar categories and the Company’s investment strategy composite returns compared to their respective benchmarks. Note that a number of the Company’s strategies do not yet have a 10-year track record. To see more detail, a table is included below these illustrations which provides information on inception date, performance since inception, and the U.S. equity strategies' performance relative to the Core and Value benchmarks.
|
|
|
1 Year |
|
|
3 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Inception |
|
|||||
% Funds Outperform |
Morningstar Category Average |
|
|
66.7 |
% |
|
|
55.6 |
% |
|
|
66.7 |
% |
|
|
33.3 |
% |
|
|
88.9 |
% |
% Assets Outperform |
Morningstar Category Average |
|
|
38.7 |
% |
|
|
60.1 |
% |
|
|
60.9 |
% |
|
|
28.2 |
% |
|
|
99.6 |
% |
% Composites Outperform |
Performance Benchmark |
|
|
57.1 |
% |
|
|
46.2 |
% |
|
|
70.0 |
% |
|
|
14.3 |
% |
|
|
78.6 |
% |
% Assets Outperform |
Performance Benchmark |
|
|
44.7 |
% |
|
|
33.5 |
% |
|
|
44.0 |
% |
|
|
0.6 |
% |
|
|
82.9 |
% |
% Composites Outperform |
Supplemental Benchmark |
|
|
28.6 |
% |
|
|
28.6 |
% |
|
|
42.9 |
% |
|
|
14.3 |
% |
|
|
57.1 |
% |
% Assets Outperform |
Supplemental Benchmark |
|
|
18.0 |
% |
|
|
4.9 |
% |
|
|
18.0 |
% |
|
|
3.4 |
% |
|
|
25.6 |
% |
Source: © 2025 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is not a guarantee of future results.
The total number of funds included in the 1-, 3-, 5-, and 10-year periods are 9, 9, 9, and 6, respectively. The percentage of Proprietary Fund assets that outperform is based on the Proprietary Fund assets as of December 31, 2025. Total fund assets for the 1-, 3-, 5-, and 10-year periods are $18.5 billion, $18.5 billion, $18.5 billion, and $10.4 billion, respectively, which represents between 35% and 63% of total Company assets for each period.
The percentage of the Company’s composites that outperform their benchmark includes all its composites (excluding Long-Duration Treasury) versus the performance benchmark for each composite, except for the Long-Short Composite which uses a blended index that is a 60%/40% weighted blend of the Russell 1000 Index and the Bloomberg U.S. Treasury Bills 1-3 Month Index as of December 31, 2024. The percentage of composite assets that outperform is based on total Company composite assets as of December 31, 2025, excluding wrap fee accounts and restricted accounts. Composite net returns are calculated using the highest applicable standard separate account fee schedule. Total composite assets for the 1-, 3-, 5-, and 10-year periods are $26.9 billion, $26.8 billion, $26.4 billion, and $17.9 billion, respectively, which represents between 61% and 92% of total Company assets for each period.
26
Table of Contents
While the Company’s equity-focused strategies use core benchmarks to evaluate investment performance over full market cycles, many clients also compare the Company's results to value benchmarks. The following is a summary of the investment returns for each of the Company’s strategies as of December 31, 2025, relative to their respective core and value indices, as applicable.
|
|
|
|
As of December 31, 2025 |
|
|||||||||||||||||
U.S. Equity Composites |
|
Inception |
|
1 Year |
|
|
3 Year |
|
|
5 Year |
|
|
10 Year |
|
|
Since |
|
|||||
Diamond Hill Large Cap |
|
6/30/2001 |
|
|
5.55 |
% |
|
|
10.37 |
% |
|
|
7.94 |
% |
|
|
10.22 |
% |
|
|
8.98 |
% |
Russell 1000 Index |
|
|
|
|
17.37 |
% |
|
|
22.74 |
% |
|
|
13.59 |
% |
|
|
14.59 |
% |
|
|
9.41 |
% |
Russell 1000 Value Index |
|
|
|
|
15.91 |
% |
|
|
13.90 |
% |
|
|
11.33 |
% |
|
|
10.53 |
% |
|
|
7.92 |
% |
Diamond Hill Large Cap Concentrated |
|
12/31/2011 |
|
|
8.56 |
% |
|
|
13.10 |
% |
|
|
9.75 |
% |
|
|
11.46 |
% |
|
|
11.91 |
% |
Russell 1000 Index |
|
|
|
|
17.37 |
% |
|
|
22.74 |
% |
|
|
13.59 |
% |
|
|
14.59 |
% |
|
|
9.41 |
% |
Russell 1000 Value Index |
|
|
|
|
15.91 |
% |
|
|
13.90 |
% |
|
|
11.33 |
% |
|
|
10.53 |
% |
|
|
7.92 |
% |
Diamond Hill Mid Cap |
|
12/31/2013 |
|
|
13.47 |
% |
|
|
11.31 |
% |
|
|
9.51 |
% |
|
|
8.66 |
% |
|
|
7.92 |
% |
Russell Midcap Index |
|
|
|
|
10.60 |
% |
|
|
14.36 |
% |
|
|
8.67 |
% |
|
|
11.01 |
% |
|
|
10.00 |
% |
Russell Midcap Value Index |
|
|
|
|
11.05 |
% |
|
|
12.27 |
% |
|
|
9.83 |
% |
|
|
9.78 |
% |
|
|
8.89 |
% |
Diamond Hill Small-Mid Cap |
|
12/31/2005 |
|
|
8.54 |
% |
|
|
9.44 |
% |
|
|
8.26 |
% |
|
|
8.02 |
% |
|
|
8.33 |
% |
Russell 2500 Index |
|
|
|
|
11.91 |
% |
|
|
13.75 |
% |
|
|
7.26 |
% |
|
|
10.40 |
% |
|
|
8.97 |
% |
Russell 2500 Value Index |
|
|
|
|
12.73 |
% |
|
|
13.21 |
% |
|
|
10.02 |
% |
|
|
9.72 |
% |
|
|
8.10 |
% |
Diamond Hill Small Cap |
|
12/31/2000 |
|
|
11.93 |
% |
|
|
16.08 |
% |
|
|
12.16 |
% |
|
|
8.85 |
% |
|
|
10.11 |
% |
Russell 2000 Index |
|
|
|
|
12.81 |
% |
|
|
13.73 |
% |
|
|
6.09 |
% |
|
|
9.62 |
% |
|
|
8.21 |
% |
Russell 2000 Value Index |
|
|
|
|
12.59 |
% |
|
|
11.73 |
% |
|
|
8.88 |
% |
|
|
9.27 |
% |
|
|
8.61 |
% |
Diamond Hill Select |
|
6/30/2000 |
|
|
13.64 |
% |
|
|
18.86 |
% |
|
|
13.17 |
% |
|
|
12.48 |
% |
|
|
10.73 |
% |
Russell 3000 Index |
|
|
|
|
17.15 |
% |
|
|
22.25 |
% |
|
|
13.15 |
% |
|
|
14.29 |
% |
|
|
8.31 |
% |
Russell 3000 Value Index |
|
|
|
|
15.71 |
% |
|
|
13.77 |
% |
|
|
11.18 |
% |
|
|
10.46 |
% |
|
|
8.10 |
% |
Diamond Hill Micro Cap |
|
9/30/2021 |
|
|
31.20 |
% |
|
|
27.07 |
% |
|
N/A |
|
|
N/A |
|
|
|
18.42 |
% |
||
Russell Micro Cap Index |
|
|
|
|
22.98 |
% |
|
|
15.20 |
% |
|
N/A |
|
|
N/A |
|
|
|
3.58 |
% |
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Alternative Composites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Diamond Hill Long-Short |
|
6/30/2000 |
|
|
19.86 |
% |
|
|
14.59 |
% |
|
|
10.76 |
% |
|
|
8.70 |
% |
|
|
7.82 |
% |
60% Russell 1000 Index / 40% BofA ML U.S. |
|
|
|
|
12.12 |
% |
|
|
15.50 |
% |
|
|
9.64 |
% |
|
|
9.78 |
% |
|
|
6.01 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
International Composites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Diamond Hill International |
|
12/31/2016 |
|
|
28.41 |
% |
|
|
16.47 |
% |
|
|
9.08 |
% |
|
N/A |
|
|
|
10.26 |
% |
|
MSCI ACWI ex USA Index |
|
|
|
|
32.39 |
% |
|
|
17.33 |
% |
|
|
7.91 |
% |
|
N/A |
|
|
|
8.86 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fixed Income Composites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Diamond Hill Short Duration Securitized |
|
7/31/2016 |
|
|
6.67 |
% |
|
|
8.34 |
% |
|
|
4.80 |
% |
|
N/A |
|
|
|
4.29 |
% |
|
Bloomberg Barclays U.S. 1-3 Yr. Gov./Credit |
|
|
|
|
5.35 |
% |
|
|
4.77 |
% |
|
|
1.97 |
% |
|
N/A |
|
|
|
2.04 |
% |
|
Diamond Hill Core Bond |
|
7/31/2016 |
|
|
7.38 |
% |
|
|
5.89 |
% |
|
|
0.77 |
% |
|
N/A |
|
|
|
2.46 |
% |
|
Bloomberg Barclays U.S. Aggregate Index |
|
|
|
|
7.30 |
% |
|
|
4.66 |
% |
|
|
(0.36 |
)% |
|
N/A |
|
|
|
1.51 |
% |
|
Diamond Hill Securitized Credit Composite |
|
10/31/2024 |
|
|
12.87 |
% |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
13.15 |
% |
|||
Diamond Hill Core Plus Composite |
|
12/31/2024 |
|
|
8.30 |
% |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
8.30 |
% |
|||
Bloomberg US Aggregate Bond Index |
|
|
|
|
7.30 |
% |
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
7.30 |
% |
|||
- |
Composite returns are net of fees. |
- |
Index returns do not reflect any fees. |
27
Table of Contents
Key Financial Performance Indicators
There are a variety of key performance indicators that the Company monitors to evaluate its business results. The following table presents the results of certain key performance indicators over the past three fiscal years:
|
|
For the Years Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Ending AUM and AUA (in millions) |
|
$ |
30,962 |
|
|
$ |
31,925 |
|
|
$ |
29,164 |
|
Average AUM and AUA (in millions) |
|
|
31,836 |
|
|
|
31,610 |
|
|
|
27,321 |
|
Net cash outflows (in millions) |
|
|
(2,741 |
) |
|
|
(289 |
) |
|
|
(494 |
) |
|
|
|
|
|
|
|
|
|
|
|||
Total revenue (in thousands) |
|
|
147,098 |
|
|
|
151,095 |
|
|
|
136,716 |
|
Net operating income |
|
|
36,736 |
|
|
|
43,892 |
|
|
|
35,504 |
|
Adjusted net operating income(a) |
|
$ |
43,046 |
|
|
$ |
48,696 |
|
|
$ |
41,434 |
|
Average advisory fee rate |
|
|
0.44 |
% |
|
|
0.45 |
% |
|
|
0.47 |
% |
Net operating profit margin |
|
|
25 |
% |
|
|
29 |
% |
|
|
26 |
% |
Adjusted net operating profit margin(a) |
|
|
29 |
% |
|
|
32 |
% |
|
|
30 |
% |
Assets Under Management
The Company derives revenue primarily from DHCM’s investment advisory and administration fees. Investment advisory and administration fees paid to DHCM are generally based on the value of the investment portfolios it manages and fluctuate with changes in the total value of its AUM. The Company, through DHCM, recognizes revenue when DHCM satisfies its performance obligations under the terms of a contract with a client.
Model Delivery Programs - Assets Under Advisement
DHCM provides strategy-specific model portfolios to sponsors of model delivery programs. DHCM is paid for its services by the program sponsor at a pre-determined rate based on AUA in the model delivery programs. DHCM does not have discretionary investment authority over individual client accounts in model delivery programs, and therefore, the AUA is not included in the Company’s AUM.
The Company’s revenues are highly dependent on both the value and composition of AUM and AUA. The following is a summary of the Company’s AUM by product and investment objective, a roll-forward of the change in AUM, and a summary of AUA for 2025, 2024, and 2023:
|
|
Assets Under Management and Assets Under Advisement |
|
|||||||||
|
|
As of December 31, |
|
|||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Proprietary Funds |
|
$ |
18,785 |
|
|
$ |
18,097 |
|
|
$ |
15,879 |
|
Separately managed accounts |
|
|
5,110 |
|
|
|
6,108 |
|
|
|
6,617 |
|
Other pooled vehicles |
|
|
3,746 |
|
|
|
3,860 |
|
|
|
3,563 |
|
Collective investment trusts |
|
|
1,741 |
|
|
|
1,947 |
|
|
|
1,359 |
|
Total AUM |
|
|
29,382 |
|
|
|
30,012 |
|
|
|
27,418 |
|
Total AUA |
|
|
1,580 |
|
|
|
1,913 |
|
|
|
1,746 |
|
Total AUM and AUA |
|
$ |
30,962 |
|
|
$ |
31,925 |
|
|
$ |
29,164 |
|
28
Table of Contents
|
|
Assets Under Management by Investment Strategy |
|
|||||||||
|
|
As of December 31, |
|
|||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
U.S. Equity |
|
|
|
|
|
|
|
|
|
|||
Large Cap |
|
$ |
14,398 |
|
|
$ |
17,702 |
|
|
$ |
17,307 |
|
Small-Mid Cap |
|
|
1,374 |
|
|
|
2,009 |
|
|
|
2,588 |
|
Mid Cap |
|
|
882 |
|
|
|
1,082 |
|
|
|
1,023 |
|
Select |
|
|
778 |
|
|
|
755 |
|
|
|
593 |
|
Small Cap |
|
|
264 |
|
|
|
253 |
|
|
|
255 |
|
Large Cap Concentrated |
|
|
190 |
|
|
|
129 |
|
|
|
98 |
|
Micro Cap |
|
|
46 |
|
|
|
33 |
|
|
|
21 |
|
Total U.S. Equity |
|
|
17,932 |
|
|
|
21,963 |
|
|
|
21,885 |
|
|
|
|
|
|
|
|
|
|
|
|||
Alternatives |
|
|
|
|
|
|
|
|
|
|||
Long-Short |
|
|
2,344 |
|
|
|
1,684 |
|
|
|
1,725 |
|
Total Alternatives |
|
|
2,344 |
|
|
|
1,684 |
|
|
|
1,725 |
|
|
|
|
|
|
|
|
|
|
|
|||
International Equity |
|
|
|
|
|
|
|
|
|
|||
International |
|
|
161 |
|
|
|
141 |
|
|
|
109 |
|
Total International Equity |
|
|
161 |
|
|
|
141 |
|
|
|
109 |
|
|
|
|
|
|
|
|
|
|
|
|||
Fixed Income |
|
|
|
|
|
|
|
|
|
|||
Short Duration Securitized Bond |
|
|
5,064 |
|
|
|
3,732 |
|
|
|
1,948 |
|
Core Fixed Income |
|
|
3,691 |
|
|
|
2,416 |
|
|
|
1,735 |
|
Securitized Credit |
|
|
133 |
|
|
|
52 |
|
|
|
— |
|
Securitized Total Return |
|
|
31 |
|
|
|
— |
|
|
|
— |
|
Long Duration Treasury |
|
|
26 |
|
|
|
24 |
|
|
|
26 |
|
Total Fixed Income |
|
|
8,945 |
|
|
|
6,224 |
|
|
|
3,709 |
|
|
|
|
|
|
|
|
|
|
|
|||
Total All Strategies |
|
|
29,382 |
|
|
|
30,012 |
|
|
|
27,428 |
|
(Less: Investments in affiliated funds)(a) |
|
|
— |
|
|
|
— |
|
|
|
(10 |
) |
Total AUM |
|
|
29,382 |
|
|
|
30,012 |
|
|
|
27,418 |
|
Total AUA(b) |
|
|
1,580 |
|
|
|
1,913 |
|
|
|
1,746 |
|
Total AUM and AUA |
|
$ |
30,962 |
|
|
$ |
31,925 |
|
|
$ |
29,164 |
|
29
Table of Contents
|
|
Change in Assets Under Management |
|
|||||||||
|
|
For the Year |
|
|||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
AUM at beginning of the year |
|
$ |
30,012 |
|
|
$ |
27,418 |
|
|
$ |
24,763 |
|
Net cash inflows (outflows) |
|
|
|
|
|
|
|
|
|
|||
Proprietary Funds |
|
|
(613 |
) |
|
|
726 |
|
|
|
(599 |
) |
Separately managed accounts |
|
|
(1,341 |
) |
|
|
(1,269 |
) |
|
|
(416 |
) |
Collective investment trusts |
|
|
(306 |
) |
|
|
403 |
|
|
|
153 |
|
Other pooled vehicles |
|
|
(481 |
) |
|
|
(149 |
) |
|
|
368 |
|
|
|
|
(2,741 |
) |
|
|
(289 |
) |
|
|
(494 |
) |
Net market appreciation and income |
|
|
2,111 |
|
|
|
2,883 |
|
|
|
3,149 |
|
Increase (decrease) during the year |
|
|
(630 |
) |
|
|
2,594 |
|
|
|
2,655 |
|
AUM at end of the year |
|
|
29,382 |
|
|
|
30,012 |
|
|
|
27,418 |
|
AUA at end of the year |
|
|
1,580 |
|
|
|
1,913 |
|
|
|
1,746 |
|
Total AUM and AUA at end of year |
|
$ |
30,962 |
|
|
$ |
31,925 |
|
|
$ |
29,164 |
|
|
|
|
|
|
|
|
|
|
|
|||
Average AUM during the year |
|
$ |
30,039 |
|
|
$ |
29,718 |
|
|
$ |
25,552 |
|
Average AUA during the year |
|
|
1,797 |
|
|
|
1,892 |
|
|
|
1,769 |
|
Total Average AUM and AUA during the year |
|
$ |
31,836 |
|
|
$ |
31,610 |
|
|
$ |
27,321 |
|
|
|
Net Cash Inflows (Outflows) Further Breakdown |
|
|
|||||||||
|
|
For the Year Ended December 31, |
|||||||||||
(in millions) |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|
|||
Net cash inflows (outflows) |
|
|
|
|
|
|
|
|
|
|
|||
Equity |
|
$ |
(5,031 |
) |
|
$ |
(2,544 |
) |
|
$ |
(1,865 |
) |
|
Fixed Income |
|
|
2,290 |
|
|
|
2,255 |
|
|
|
1,371 |
|
|
|
|
$ |
(2,741 |
) |
|
$ |
(289 |
) |
|
$ |
(494 |
) |
|
2025 Discussion of Net Cash Outflows
Flows out of the Company’s equity strategies were largely driven by flows out of its Large Cap, Small-Mid Cap, and Mid Cap strategies, which experienced net outflows of $4.1 billion, $0.7 billion, and $0.4 billion, respectively, partially offset by $0.3 of inflows from the Long-Short strategy. Outflows from the equity strategies were partially offset by fixed income net inflows of $2.3 billion, largely driven by flows into the Core Bond and Short Duration strategies, which both experienced net inflows of $1.1 billion.
Trend in Net Cash Outflows and Potential Impact on Results of Operations
Net cash outflows during 2025 continued to be concentrated in the Company’s equity strategies, particularly within its Large Cap strategy. As discussed above, Large Cap experienced net outflows of $4.1 billion during 2025, primarily reflecting client rebalancing activity, asset allocation shifts away from actively managed U.S. equities, and mandate-specific redemptions from certain institutional and intermediary clients. Net outflows were also influenced by relative investment performance, which trailed both core and value benchmarks and peer strategies during 2025, which contributed to elevated redemption activity.
This marks the fourth consecutive year of outflows in the Large Cap strategy. Large Cap has historically represented a significant portion of the Company’s total AUM and investment advisory fee revenue (49% of AUM and 52% of advisory fee revenues as of December 31, 2025). As a result, sustained net outflows in this strategy could negatively impact operating results if not offset by market appreciation, asset growth in other strategies, changes in product mix, or expense management initiatives. Management continues to focus on diversification of the Company’s asset base and alignment of resources with areas of client demand; however, there can be no assurance that such efforts will be sufficient to offset continued net outflows in Large Cap.
2024 Discussion of Net Cash Outflows
30
Table of Contents
Flows out of the Company’s equity strategies in 2024 were largely driven by flows out of its Large Cap and Small-Mid Cap strategies, which experienced net outflows of $1.6 billion and $0.8 billion, respectively. Outflows from the equity strategies were partially offset by fixed income net inflows of $2.3 billion, largely driven by flows into the Short Duration and Core Bond strategies, which experienced net inflows of $1.6 billion and $0.6 billion, respectively.
2023 Discussion of Net Cash Outflows
Flows out of the Company’s equity strategies in 2023 were largely driven by flows out of its Large Cap strategy, which experienced net outflows of $1.4 billion. Net outflows from the Company’s other equity strategies totaled approximately $0.5 billion. Outflows from the equity strategies in 2023 were partially offset by fixed income net inflows of $1.4 billion into the Company’s fixed income strategies.
For additional information regarding the risks associated with net cash outflows, client concentration, and changes in assets under management, see “Risk Factors — A significant portion of DHCM’s revenues is concentrated in a limited number of Proprietary Funds and strategies, particularly the Diamond Hill Large Cap strategy, and declines in assets under management, investment performance, or client flows could materially and adversely affect our results.”
Consolidated Results of Operations
The following is a table and discussion of the Company’s consolidated results of operations.
(in thousands, except per share amounts and percentages) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
||||||
Total revenue |
|
$ |
147,098 |
|
|
$ |
151,095 |
|
|
|
(3 |
)% |
|
$ |
151,095 |
|
|
$ |
136,716 |
|
|
|
11 |
% |
Net operating income |
|
|
36,736 |
|
|
|
43,892 |
|
|
|
(16 |
)% |
|
|
43,892 |
|
|
|
35,504 |
|
|
|
24 |
% |
Adjusted net operating income(a) |
|
|
43,046 |
|
|
|
48,696 |
|
|
|
(12 |
)% |
|
|
48,696 |
|
|
|
41,434 |
|
|
|
18 |
% |
Investment income, net |
|
|
30,545 |
|
|
|
15,119 |
|
|
|
102 |
% |
|
|
15,119 |
|
|
|
23,071 |
|
|
|
(34 |
)% |
Income tax expense |
|
|
17,921 |
|
|
|
15,833 |
|
|
|
13 |
% |
|
|
15,833 |
|
|
|
15,490 |
|
|
|
2 |
% |
Net income attributable to common shareholders |
|
|
48,762 |
|
|
|
43,178 |
|
|
|
13 |
% |
|
|
43,178 |
|
|
|
42,226 |
|
|
|
2 |
% |
Earnings per share attributable to common shareholders |
|
$ |
17.91 |
|
|
$ |
15.66 |
|
|
|
14 |
% |
|
$ |
15.66 |
|
|
$ |
14.32 |
|
|
|
9 |
% |
Adjusted earnings per share attributable to common |
|
$ |
11.56 |
|
|
$ |
12.92 |
|
|
|
(11 |
)% |
|
$ |
12.92 |
|
|
$ |
10.28 |
|
|
|
26 |
% |
Net operating profit margin |
|
|
25 |
% |
|
|
29 |
% |
|
NM |
|
|
|
29 |
% |
|
|
26 |
% |
|
NM |
|
||
Adjusted net operating profit margin(a) |
|
|
29 |
% |
|
|
32 |
% |
|
NM |
|
|
|
32 |
% |
|
|
30 |
% |
|
NM |
|
||
Summary Discussion of Consolidated Results of Operations - 2025 Compared to 2024
Revenue for 2025 decreased $4.0 million compared to 2024, primarily due to a decrease in the average advisory fee rate from 0.45% in 2024 to 0.44% in 2025, reflecting changes in asset mix, including growth in lower-fee fixed income strategies relative to higher-fee equity strategies, partially offset by a 1% increase in total average AUM and AUA. Refer to the “Revenue” section below in this MD&A for further details on the decrease in the average advisory fee rate.
Operating profit margin was 25% for 2025 and 29% for 2024. The decrease in operating profit margin was primarily driven by an increase in selling, general and administrative expenses (3% of the 4% margin decrease) and deferred compensation expense (1% of the 4% margin decrease). Included in selling, general and administrative expenses were $2.9 million of transaction-related expenses associated with the Company's pending merger with First Eagle, which reduced operating profit margin by approximately 2%.
31
Table of Contents
Adjusted net operating profit margin was 29% for 2025 and 32% for 2024. Adjusted net operating profit margin excludes the impact of market movements on the deferred compensation liability and related economic hedges, and the impact of the Proprietary Funds consolidated during the period. Refer to Note 2 to the consolidated financial statements for a detailed description of the funds that are consolidated during the period. Refer to the “Non-GAAP Financial Measures and Reconciliation” section below in this MD&A for further details on adjusted net operating profit margin.
The Company expects that its operating margin will fluctuate from period to period based on various factors, including revenues, investment results in the strategies the Company manages, employee performance, staffing levels, and gains and losses on investments held in the Diamond Hill Fixed Term Deferred Compensation Plan and the Diamond Hill Variable Term Deferred Compensation Plan (together, the “Deferred Compensation Plans”).
The Company had $30.5 million in investment income in 2025, compared to $15.1 million in investment income in 2024. The increase in investment income reflects favorable market conditions during 2025, including higher equity market returns and improved performance across portions of the fixed income markets, which positively impacted the value of the Company’s investment portfolio.
Income tax expense increased $2.1 million in 2025, compared to 2024. The increase in income tax expense was primarily due to an increase in the Company’s income before taxes.
The Company generated net income attributable to common shareholders of $48.8 million ($17.91 per diluted share) for 2025, compared to $43.2 million ($15.66 per diluted share) for 2024. The year-over-year increase in net income attributable to common shareholders was primarily due to an increase in investment income in 2025 compared to 2024, partially offset by a decrease in operating income.
Summary Discussion of Consolidated Results of Operations - 2024 Compared to 2023
Revenue for 2024 increased $14.4 million compared to 2023, primarily due to a 16% increase in total average AUM and AUA, partially offset by a decrease in the average advisory fee rate from 0.47% in 2023 to 0.45% in 2024. Refer to the “Revenue” section below in this MD&A for further details on the decrease in the average advisory fee rate.
Operating profit margin was 29% for 2024 and 26% for 2023. The increase in operating profit margin was primarily driven by compensation, and related costs, excluding deferred compensation expense (2% of the 3% margin increase) and deferred compensation expense (1% of the 3% margin increase).
Adjusted net operating profit margin was 32% for 2024 and 30% for 2023. Adjusted net operating profit margin excludes the impact of market movements on the deferred compensation liability and related economic hedges, and the impact of the Proprietary Funds consolidated during the period.
The Company had $15.1 million in investment income due to market appreciation in 2024, compared to $23.1 million in investment income due to market appreciation in 2023.
Income tax expense increased $0.3 million in 2024, compared to 2023. The increase in income tax expense was due to an increase in the Company’s income before taxes, and an increase in its effective tax rate from 26.4% to 26.8% year over year. The increase in the Company’s effective tax rate in 2024 was due to the impact attributable to redeemable noncontrolling interests.
The Company generated net income attributable to common shareholders of $43.2 million ($15.66 per diluted share) for 2024, compared to $42.2 million ($14.32 per diluted share) for 2023. The year-over-year increase in net income attributable to common shareholders was primarily due to an increase in revenues and was partially offset by lower investment income in 2024 compared to higher investment income in 2023.
Revenue
(in thousands, except percentages) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
||||||
Investment advisory |
|
$ |
139,869 |
|
|
$ |
143,342 |
|
|
|
(2 |
)% |
|
$ |
143,342 |
|
|
$ |
129,180 |
|
|
|
11 |
% |
Fund administration, net |
|
|
7,229 |
|
|
|
7,753 |
|
|
|
(7 |
)% |
|
|
7,753 |
|
|
|
7,536 |
|
|
|
3 |
% |
Total |
|
$ |
147,098 |
|
|
$ |
151,095 |
|
|
|
(3 |
)% |
|
$ |
151,095 |
|
|
$ |
136,716 |
|
|
|
11 |
% |
32
Table of Contents
Revenue - 2025 Compared to 2024
Investment Advisory Fees. Investment advisory fees decreased by $3.5 million or 2%, from 2024 to 2025. Investment advisory fees are calculated as a percentage of the market value of client accounts at contractual fee rates, which vary by investment product. The decrease in investment advisory fees was primarily due to a decrease in the average advisory fee rate from 0.45% to 0.44% period over period, partially offset by a slight increase in total average AUM and AUA of 1%.
The average advisory fee rate for equity assets remained flat at 0.48% in 2024 and 2025. The average advisory fee rate for fixed income assets increased from 0.30% in 2024 to 0.33% in 2025. The decrease in the total average advisory fee rate was due to the growth in fixed income assets, which increased from 15% of total average AUM and AUA in 2024, to 24% in 2025. The average advisory fee rate is calculated by dividing investment advisory revenues by total average AUM and AUA during the period. If the trend in the growth in fixed income assets as a percentage of total assets continues, the total average advisory fee rate could continue to decline.
Fund Administration Fees. Fund administration fees decreased $0.5 million, or 7%, from 2024 compared to 2025. Fund administration fees include administration fees received from the Proprietary Funds, which are calculated as a percentage of the funds’ average AUM. This decrease was primarily due to an increase in administration fees paid on behalf of the funds as a percentage of average fund AUM in part due to the expense of new funds added during the period, partially offset by the impact of a 9% increase in the Proprietary Funds’ average AUM from 2024 compared to 2025.
Revenue - 2024 Compared to 2023
Investment Advisory Fees. Investment advisory fees increased by $14.2 million, or 11%, from 2023 to 2024. The increase in investment advisory fees was primarily due to an increase in total average AUM and AUA of 16%, partially offset by a decrease in the average advisory fee rate from 0.47% to 0.45% period over period.
The average advisory fee rate for equity assets decreased from 0.49% in 2023 to 0.48% in 2024, and the average advisory fee rate for fixed income assets remained unchanged at 0.30% in 2023 and 2024. The decrease in the total average advisory fee rate was due to the growth in fixed income assets, which increased from 11% of total average AUM and AUA in 2023, to 15% in 2024. The average advisory fee rate is calculated by dividing investment advisory revenues by total average AUM and AUA during the period.
Fund Administration Fees. Fund administration fees increased $0.2 million, or 3%, from 2023 compared to 2024. Fund administration fees include administration fees received from the Proprietary Funds, which are calculated as a percentage of the funds’ average AUM. This increase was primarily due to the impact of a 15% increase in the Proprietary Funds’ average AUM from 2023 compared to 2024, partially offset by an increase in administration fees paid on behalf of the funds as a percentage of average fund AUM.
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
(in thousands, except percentages) |
|
2025 |
|
|
2024 |
|
|
% Change |
|
|
2024 |
|
|
2023 |
|
|
% Change |
|
||||||
Compensation and related costs, excluding |
|
$ |
72,468 |
|
|
$ |
74,589 |
|
|
|
(3 |
)% |
|
$ |
74,589 |
|
|
$ |
70,731 |
|
|
|
5 |
% |
Deferred compensation expense |
|
|
6,095 |
|
|
|
4,776 |
|
|
|
28 |
% |
|
|
4,776 |
|
|
|
5,600 |
|
|
|
(15 |
)% |
General and administrative |
|
|
19,670 |
|
|
|
16,785 |
|
|
|
17 |
% |
|
|
16,785 |
|
|
|
14,935 |
|
|
|
12 |
% |
Sales and marketing |
|
|
8,202 |
|
|
|
7,510 |
|
|
|
9 |
% |
|
|
7,510 |
|
|
|
6,684 |
|
|
|
12 |
% |
Fund administration |
|
|
3,927 |
|
|
|
3,543 |
|
|
|
11 |
% |
|
|
3,543 |
|
|
|
3,262 |
|
|
|
9 |
% |
Total |
|
$ |
110,362 |
|
|
$ |
107,203 |
|
|
|
3 |
% |
|
$ |
107,203 |
|
|
$ |
101,212 |
|
|
|
6 |
% |
33
Table of Contents
Expenses - 2025 Compared to 2024
Compensation and Related Costs, Excluding Deferred Compensation Expense. Employee compensation and related costs (excluding deferred compensation expense) decreased by $2.1 million in 2025. This decrease is due to a decrease in incentive compensation of $3.6 million and a decrease in severance expense of $0.7 million, partially offset by an increase in restricted shares expense of $1.6 million and an increase in salary and related benefits of $0.6 million. On average, the Company had 125 employees in 2025 and 128 employees in 2024. Incentive compensation expense can fluctuate significantly period over period as the Company evaluates investment performance, individual performance, its own performance, and other factors.
Deferred Compensation Expense. Deferred compensation expense was $6.1 million for 2025 compared to $4.8 million for 2024, primarily due to an increase in market appreciation on the Deferred Compensation Plans’ investments in 2025 compared to 2024.
The gain (loss) on the Deferred Compensation Plans’ investments increases (decreases) deferred compensation expense (benefit) and is included in operating income. Deferred compensation expense (benefit) is offset by an equal amount in investment income (loss) below net operating income on the consolidated statements of income, and thus, has no impact on net income attributable to the Company.
General and Administrative. General and administrative expenses increased by $2.9 million, or 17%, from 2024 compared to 2025. This increase was primarily due to transaction costs of $2.9 million related to the Company’s proposed merger with First Eagle.
Sales and Marketing. Sales and marketing expenses increased by $0.7 million, or 9%, from 2024 compared to 2025. The increase was primarily due to a $0.5 million increase in payments made to third-party intermediaries as a result of the increase in the Proprietary Funds’ average AUM period over period and a $0.2 million increase in distribution data costs for technology utilized by the sales and marketing teams.
Fund Administration. Fund administration expenses increased by $0.4 million, or 11%, from 2024 compared to 2025. Fund administration expenses consist of both variable and fixed expenses. The variable expenses are based on Proprietary Fund AUM levels and the number of shareholder accounts. The increase was due to an increase in variable expenses as a result of a 9% increase in the Proprietary Funds’ average AUM period over period.
Expenses - 2024 Compared to 2023
Compensation and Related Costs, Excluding Deferred Compensation Expense. Employee compensation and related costs (excluding deferred compensation expense) increased by $3.9 million in 2024. This increase is due to an increase in incentive compensation of $1.8 million, an increase in salary and related benefits of $1.0 million, an increase in severance expense of $0.9 million, and an increase in restricted shares expense of $0.2 million. On average, the Company had 128 employees in 2024 and 129 employees in 2023. Incentive compensation expense can fluctuate significantly period over period as the Company evaluates investment performance, individual performance, its own performance, and other factors.
Deferred Compensation Expense. Deferred compensation expense was $4.8 million for 2024 compared to an expense of $5.6 million for 2023, primarily due to a decrease in market appreciation on the Deferred Compensation Plans’ investments in 2024 compared to 2023.
General and Administrative. General and administrative expenses increased by $1.8 million, or 12%, from 2023 compared to 2024. This increase was primarily due to a $1.5 million increase in expenses to support improvements to the Company’s research management system, cloud data platform and overall technology support, and an increase in investment research-related expenses of $0.3 million.
Sales and Marketing. Sales and marketing expenses increased by $0.8 million, or 12%, from 2023 compared to 2024. The increase was primarily due to an increase in payments made to third-party intermediaries as a result of the increase in the Proprietary Funds’ average AUM period over period.
Fund Administration. Fund administration expenses increased by less than $0.1 million, or 9%, from 2023 compared to 2024. Fund administration expenses consist of both variable and fixed expenses. The variable expenses are based on Proprietary Fund AUM levels
34
Table of Contents
and the number of shareholder accounts. The increase was due to an increase in variable expenses as a result of the increase in the Proprietary Funds’ average AUM period over period.
Liquidity and Capital Resources
Sources of Liquidity
The Company’s current financial condition is liquid, with a significant amount of its assets comprised of cash and cash equivalents, investments, accounts receivable, and other current assets. The Company’s main source of liquidity is cash flows from operating activities, which are generated from investment advisory and fund administration fees. Cash and cash equivalents, investments held directly by DHCM, accounts receivable, and other current assets represented $200.4 million and $187.4 million of total assets as of December 31, 2025, and 2024, respectively. The Company believes that these sources of liquidity, as well as its continuing cash flows from operating activities, will be sufficient to meet its current and future operating needs for the next 12 months and beyond.
Uses of Liquidity
The Company’s primary uses of liquidity include funding operating expenses, seed capital investments in new and existing investment strategies, capital expenditures, and the return of capital to shareholders through dividends and share repurchases.
In connection with the execution of the Merger Agreement, the Company is subject to customary interim operating covenants that restrict certain actions prior to the completion or termination of the Merger Agreement. Among other things, these covenants prohibit the Company, without the prior written consent of First Eagle, from declaring or paying dividends, repurchasing DHIL common shares, issuing equity securities, or making, increasing, reducing, redeeming, or otherwise modifying seed capital investments.
As a result of these restrictions, the Company does not expect to make dividend payments, repurchase DHIL common shares, issue equity securities, or initiate, redeem, or materially modify seed capital investments prior to the consummation or termination of the Merger.
Share Repurchases
On November 4, 2024, the Board approved the 2024 Repurchase Program. The 2024 Repurchase Program authorizes management to repurchase up to $50.0 million of DHIL’s common shares in the open market and in private transactions in accordance with applicable securities laws. The 2024 Repurchase Program will expire on May 4, 2026, or upon the earlier completion of all authorized purchases under the program. As of December 31, 2025, $24.6 million remained available for repurchases under the 2024 Repurchase Program. Prior to the approval of the 2024 Repurchase Program, the Company repurchased shares under similar repurchase programs.
The authority to repurchase shares may be exercised from time to time as market conditions warrant and is subject to regulatory constraints. The timing, amount, and other terms and conditions of any repurchases will be determined by management in its discretion based on a variety of factors, including the market price of such shares, corporate considerations, general market and economic conditions, and applicable legal requirements.
The Company is restricted from repurchasing shares during the pendency of the Merger pursuant to the terms of the Merger Agreement.
The following table summarizes the Company’s annual share repurchase transactions:
Year |
|
Total Number |
|
|
Average Price |
|
|
Purchase Price of |
|
|||
2025 |
|
|
120,081 |
|
|
$ |
140.61 |
|
|
$ |
16,884,763 |
|
2024 |
|
|
195,224 |
|
|
|
154.92 |
|
|
|
30,244,638 |
|
2023 |
|
|
212,638 |
|
|
|
162.81 |
|
|
|
34,619,944 |
|
Total |
|
|
527,943 |
|
|
$ |
154.85 |
|
|
$ |
81,749,345 |
|
35
Table of Contents
Dividends
Fiscal 2025 was the 18th consecutive year that the Company paid a dividend.
A summary of cash dividends paid during the years ended December 31, 2025, 2024, and 2023 is presented below:
Year |
|
Regular Dividend |
|
|
Regular Dividend |
|
|
Special Dividend |
|
|
Special Dividend |
|
|
Total Dividend |
|
|
Total Dividends |
|
||||||
2025 |
|
$ |
6.00 |
|
|
$ |
16,364,513 |
|
|
$ |
4.00 |
|
|
$ |
10,821,180 |
|
|
$ |
10.00 |
|
|
$ |
27,185,693 |
|
2024 |
|
$ |
6.00 |
|
|
|
16,530,676 |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
6.00 |
|
|
|
16,530,676 |
|
2023 |
|
$ |
6.00 |
|
|
|
17,676,364 |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
6.00 |
|
|
|
17,676,364 |
|
Total |
|
|
|
|
$ |
50,571,553 |
|
|
|
|
|
$ |
10,821,180 |
|
|
|
|
|
$ |
61,392,733 |
|
|||
Under the Merger Agreement, the Company is restricted from declaring or paying dividends during the period from the signing of the Merger Agreement to the completion or termination of the Merger. As a result, the Company does not expect to declare or pay additional dividends prior to the consummation of the Merger.
Working Capital
As of December 31, 2025, the Company had working capital of approximately $165.6 million, compared to $150.4 million as of December 31, 2024. Working capital includes cash and cash equivalents, accounts receivable, investments (excluding those held in the Deferred Compensation Plans), and other current assets of DHCM, net of accounts payable and accrued expenses, accrued incentive compensation, and other current DHCM liabilities.
The Company had no debt and the Company believes its available working capital is sufficient to cover current expenses and presently anticipated capital expenditures.
Below is a summary of investments as of December 31, 2025 and 2024:
|
|
As of December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Corporate Investments: |
|
|
|
|
|
|
||
Diamond Hill Core Plus Bond Fund |
|
$ |
38,206,453 |
|
|
$ |
35,294,858 |
|
Diamond Hill International Fund |
|
|
34,312,222 |
|
|
|
54,887,433 |
|
Diamond Hill Securitized Total Return Fund |
|
|
31,162,977 |
|
|
|
— |
|
Diamond Hill Large Cap Concentrated ETF (a) |
|
|
15,428,638 |
|
|
|
— |
|
Diamond Hill Large Cap Concentrated Fund (a) |
|
|
— |
|
|
|
14,180,828 |
|
Diamond Hill Micro Cap Fund, LP |
|
|
14,792,139 |
|
|
|
15,978,910 |
|
Diamond Hill Securitized Credit Fund |
|
|
985,200 |
|
|
|
117,266 |
|
Total Corporate Investments |
|
|
134,887,629 |
|
|
|
120,459,295 |
|
Deferred Compensation Plan Investments in the Funds |
|
|
42,510,592 |
|
|
|
39,129,093 |
|
Total investments held by DHCM |
|
|
177,398,221 |
|
|
|
159,588,388 |
|
Redeemable noncontrolling interest in the Consolidated Fund(s) |
|
|
— |
|
|
|
164,593 |
|
Total Investments |
|
$ |
177,398,221 |
|
|
$ |
159,752,981 |
|
36
Table of Contents
Cash Flow Analysis
Cash Flows from Operating Activities
The Company’s cash flows from operating activities are calculated by adjusting net income to reflect other significant operating sources and uses of cash, certain significant non-cash items (such as share-based compensation), and timing differences in the cash settlement of operating assets and liabilities. The Company expects that cash flows provided by operating activities will continue to serve as its primary source of working capital. Cash flows attributable to the Consolidated Funds primarily reflect changes in the underlying investment portfolios of those funds and, as such, do not impact the Company’s core operations, liquidity, or ability to fund its operating activities, as the assets and cash flows of the Consolidated Funds are not available for general corporate purposes.
In 2025, net cash used in operating activities totaled $6.6 million. Cash flows used in operating activities were primarily driven by net investment purchase activity by the Consolidated Funds of $53.0 million and the cash impact of timing differences in the settlement of other assets and liabilities of $17.6 million. These outflows were partially offset by net income of $49.4 million as well as non-cash adjustments added back to net income consisting of share-based compensation of $13.4 million and depreciation of $1.2 million.
In 2024, net cash provided by operating activities totaled $16.6 million. Cash provided by operating activities was primarily driven by net income of $43.2 million as well as non-cash adjustments added back to net income consisting of share-based compensation of $11.8 million and depreciation of $1.2 million. These cash inflows were partially offset by the net change in securities held by the Consolidated Funds of $35.8 million and the cash impact of timing differences in the settlement of other assets and liabilities of $3.8 million. Net cash provided by operating activities of $16.6 million was inclusive of $35.9 million of cash used in operations by the Consolidated Funds.
In 2023, net cash provided by operating activities totaled $34.7 million. Cash provided by operating activities was primarily driven by net income of $43.1 million as well as non-cash adjustments added back to net income consisting of share-based compensation of $11.7 million and depreciation of $1.3 million. These cash inflows were partially offset by the net change in securities held by the Consolidated Funds of $10.9 million and the cash impact of timing differences in the settlement of other assets and liabilities of $10.5 million. Net cash provided by operating activities of $34.7 million was inclusive of $9.8 million of cash used in operations by the Consolidated Funds.
Cash Flows from Investing Activities
The Company’s cash flows from investing activities consist primarily of capital expenditures and purchases and redemptions in its investment portfolio.
Cash flows provided by investing activities totaled $32.8 million in 2025. Cash flows provided by investing activities were driven by proceeds from the sale of Company-sponsored investments totaling $46.7 million, partially offset by purchases of Company-sponsored investments of $11.5 million and purchases of property and equipment of $2.4 million.
Cash flows provided by investing activities totaled $30.5 million in 2024. Cash flows provided by investing activities were driven by proceeds from the sale of Company-sponsored investments totaling $47.0 million, partially offset by purchases of Company-sponsored investments of $15.1 million and purchases of property and equipment of $1.4 million.
Cash flows used in investing activities totaled $4.2 million in 2023. Cash flows used in investing activities were driven by purchases of Company-sponsored investments of $19.5 million, partially offset by proceeds from the sale of Company-sponsored investments totaling $15.3 million.
Cash Flows from Financing Activities
The Company’s cash flows from financing activities consist primarily of the repurchase of DHIL common shares, dividends paid on DHIL common shares, DHIL common shares withheld related to employee tax withholding proceeds received under the Diamond Hill Investment Group, Inc. Employee Stock Purchase Plan (“ESPP”), and distributions to, or contributions from, redeemable noncontrolling interest holders.
37
Table of Contents
In 2025, net cash used in financing activities totaled $25.3 million, consisting of the payment of dividends of $27.2 million, repurchases of DHIL’s common shares of $16.9 million and the value of shares withheld to cover employee tax withholding obligations of $4.2 million. These cash outflows were partially offset by net subscriptions received in the Consolidated Funds from redeemable non-controlling interest holders of $22.7 million and proceeds received under the ESPP of $0.3 million.
In 2024, net cash used in financing activities totaled $52.5 million, consisting of repurchases of DHIL’s common shares of $30.2 million, the payment of dividends of $16.5 million, and the value of shares withheld to cover employee tax withholding obligations of $6.3 million. These cash outflows were partially offset by proceeds received under the ESPP of $0.3 million and net subscriptions received in the Consolidated Funds from redeemable non-controlling interest holders of $0.2 million.
In 2023, net cash used in financing activities totaled $46.7 million, consisting of repurchases of DHIL’s common shares of $34.6 million, the payment of dividends of $17.7 million, and the value of shares withheld to cover employee tax withholding obligations of $5.2 million. These cash outflows were partially offset by net subscriptions received in the Consolidated Funds from redeemable non-controlling interest holders of $10.4 million and proceeds received under the ESPP of $0.4 million.
Supplemental Consolidated Cash Flow Statement
The following table summarizes the condensed cash flows for 2025, 2024, and 2023 that are attributable to the Company and to the Consolidated Funds, and the related eliminations required in preparing the consolidated financial statements. Cash flows attributable to the Consolidated Funds are included solely as a result of consolidation and do not affect the Company’s core liquidity or cash available for general corporate purposes.
|
|
Year Ended December 31, 2025 |
|
|||||||||||||
|
|
Cash flow |
|
|
Cash flow |
|
|
Eliminations |
|
|
As reported on |
|
||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
48,761,506 |
|
|
$ |
3,408,222 |
|
|
$ |
(2,809,729 |
) |
|
$ |
49,359,999 |
|
Adjustments to reconcile net income to net cash used |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation |
|
|
1,186,624 |
|
|
|
— |
|
|
|
— |
|
|
|
1,186,624 |
|
Share-based compensation |
|
|
13,396,426 |
|
|
|
— |
|
|
|
— |
|
|
|
13,396,426 |
|
Net gains on investments |
|
|
(21,517,229 |
) |
|
|
(3,408,222 |
) |
|
|
1,281,986 |
|
|
|
(23,643,465 |
) |
Net change in securities held by Consolidated Funds |
|
|
— |
|
|
|
(52,990,770 |
) |
|
|
— |
|
|
|
(52,990,770 |
) |
Other changes in assets and liabilities |
|
|
5,608,800 |
|
|
|
463,891 |
|
|
|
— |
|
|
|
6,072,691 |
|
Net cash used in operating activities |
|
|
47,436,127 |
|
|
|
(52,526,879 |
) |
|
|
(1,527,743 |
) |
|
|
(6,618,495 |
) |
Net cash provided by investing activities |
|
|
1,208,391 |
|
|
|
— |
|
|
|
31,543,102 |
|
|
|
32,751,493 |
|
Net cash used in financing activities |
|
|
(48,024,427 |
) |
|
|
52,705,419 |
|
|
|
(30,015,359 |
) |
|
|
(25,334,367 |
) |
Net change during the year |
|
|
620,091 |
|
|
|
178,540 |
|
|
|
— |
|
|
|
798,631 |
|
Cash and cash equivalents at beginning of year |
|
|
41,624,604 |
|
|
|
— |
|
|
|
— |
|
|
|
41,624,604 |
|
Cash and cash equivalents at end of year |
|
$ |
42,244,695 |
|
|
$ |
178,540 |
|
|
$ |
— |
|
|
$ |
42,423,235 |
|
38
Table of Contents
|
|
Year Ended December 31, 2024 |
|
|||||||||||||
|
|
Cash flow |
|
|
Cash flow |
|
|
Eliminations |
|
|
As reported on |
|
||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
43,177,729 |
|
|
$ |
(226,242 |
) |
|
$ |
226,431 |
|
|
$ |
43,177,918 |
|
Adjustments to reconcile net income to net cash provided |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation |
|
|
1,224,475 |
|
|
|
— |
|
|
|
— |
|
|
|
1,224,475 |
|
Share-based compensation |
|
|
11,821,490 |
|
|
|
— |
|
|
|
— |
|
|
|
11,821,490 |
|
Net gains on investments |
|
|
(7,799,438 |
) |
|
|
226,242 |
|
|
|
(506,951 |
) |
|
|
(8,080,147 |
) |
Net change in securities held by Consolidated Funds |
|
|
— |
|
|
|
(35,809,404 |
) |
|
|
— |
|
|
|
(35,809,404 |
) |
Other changes in assets and liabilities |
|
|
4,345,935 |
|
|
|
(81,415 |
) |
|
|
— |
|
|
|
4,264,520 |
|
Net cash provided by operating activities |
|
|
52,770,191 |
|
|
|
(35,890,819 |
) |
|
|
(280,520 |
) |
|
|
16,598,852 |
|
Net cash (used in) provided by investing activities |
|
|
(5,413,528 |
) |
|
|
— |
|
|
|
35,925,520 |
|
|
|
30,511,992 |
|
Net cash used in financing activities |
|
|
(52,723,938 |
) |
|
$ |
35,890,819 |
|
|
$ |
(35,645,000 |
) |
|
|
(52,478,119 |
) |
Net change during the year |
|
|
(5,367,275 |
) |
|
|
— |
|
|
|
— |
|
|
|
(5,367,275 |
) |
Cash and cash equivalents at beginning of year |
|
|
46,991,879 |
|
|
|
— |
|
|
|
— |
|
|
|
46,991,879 |
|
Cash and cash equivalents at end of year |
|
$ |
41,624,604 |
|
|
|
— |
|
|
|
— |
|
|
$ |
41,624,604 |
|
|
|
Year Ended December 31, 2023 |
|
|||||||||||||
|
|
Cash flow |
|
|
Cash flow |
|
|
Eliminations |
|
|
As reported on |
|
||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income |
|
$ |
42,226,422 |
|
|
$ |
3,818,572 |
|
|
$ |
(2,959,446 |
) |
|
$ |
43,085,548 |
|
Adjustments to reconcile net income to net cash provided |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation |
|
|
1,289,315 |
|
|
|
— |
|
|
|
— |
|
|
|
1,289,315 |
|
Share-based compensation |
|
|
11,691,890 |
|
|
|
— |
|
|
|
— |
|
|
|
11,691,890 |
|
Net gains on investments |
|
|
(15,677,551 |
) |
|
|
(3,818,572 |
) |
|
|
2,959,446 |
|
|
|
(16,536,677 |
) |
Net change in securities held by Consolidated Funds |
|
|
— |
|
|
|
(10,930,911 |
) |
|
|
— |
|
|
|
(10,930,911 |
) |
Other changes in assets and liabilities |
|
|
4,959,742 |
|
|
|
1,110,217 |
|
|
|
— |
|
|
|
6,069,959 |
|
Net cash provided by operating activities |
|
|
44,489,818 |
|
|
|
(9,820,694 |
) |
|
|
— |
|
|
|
34,669,124 |
|
Net cash used in investing activities |
|
|
(3,675,461 |
) |
|
|
— |
|
|
|
(530,163 |
) |
|
|
(4,205,624 |
) |
Net cash used in financing activities |
|
|
(57,017,780 |
) |
|
$ |
9,820,694 |
|
|
$ |
530,163 |
|
|
|
(46,666,923 |
) |
Net change during the year |
|
|
(16,203,423 |
) |
|
|
— |
|
|
|
— |
|
|
|
(16,203,423 |
) |
Cash and cash equivalents at beginning of year |
|
|
63,195,302 |
|
|
|
— |
|
|
|
— |
|
|
|
63,195,302 |
|
Cash and cash equivalents at end of year |
|
$ |
46,991,879 |
|
|
|
— |
|
|
|
— |
|
|
$ |
46,991,879 |
|
39
Table of Contents
Material Cash Commitments
The Company’s material cash commitments consist of its obligations under its Deferred Compensation Plans, lease obligations, and other contractual amounts that will be due for the purchase of goods and services to be used in its operations. Some of these contractual amounts may be cancelable under certain conditions and may involve termination fees. The Company expects to fund these cash commitments with future cash flow from operations and its Deferred Compensation Plans’ investments in the Proprietary Funds.
In addition, in connection with the proposed merger with First Eagle, the Company has incurred, and expects to continue to incur, transaction-related costs, including legal, financial advisory, accounting, proxy solicitation, and other professional fees. The timing and amount of any remaining merger-related costs will depend on the timing and outcome of the proposed transaction.
The Merger Agreement also provides for the potential payment of a termination fee under certain circumstances. See Item 1A. Risk Factors — “Failure to complete the Merger could adversely affect the Company and its shareholders” for a discussion of the potential termination fee and related risks, including how such a payment could be funded if triggered.
Its obligations under the Deferred Compensation Plans are disclosed on the consolidated balance sheets with more information included in Note 7 to the consolidated financial statements. Its lease obligations are disclosed in Note 8 to the consolidated financial statements. The Company’s other material cash commitments for goods and services used in operations primarily consist of obligations related to long-term software licensing and maintenance contracts.
Non-GAAP Financial Measures and Reconciliation
As a supplement to information calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company is providing certain financial measures that are based on methodologies other than GAAP (“non-GAAP”). Management believes the non-GAAP financial measures below are useful measures of the Company’s core business activities, are important metrics in estimating the value of an asset management business, and help facilitate comparisons to Company operating performance across periods. These non-GAAP financial measures are presented for supplemental informational purposes only, should not be used as a substitute for financial measures calculated in accordance with GAAP and may be calculated differently from similarly titled non-GAAP measures used by other companies. The following schedules reconcile the differences between financial measures calculated in accordance with GAAP and non-GAAP financial measures for 2025 and 2024. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, as well as the Company’s condensed consolidated financial statements and related notes included in Item 8 (Financial Statements and Supplementary Data) of this report.
|
|
Year Ended December 31, 2025 |
|
|||||||||||||||||||||||||
(in thousands, except percentages and per share data) |
|
Total |
|
|
Net operating |
|
|
Total non- |
|
|
Income tax |
|
|
Net income |
|
|
Earnings per |
|
|
Net |
|
|||||||
GAAP Basis |
|
$ |
110,362 |
|
|
$ |
36,736 |
|
|
$ |
30,545 |
|
|
$ |
17,921 |
|
|
$ |
48,762 |
|
|
$ |
17.91 |
|
|
|
25 |
% |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Deferred compensation liability(1) |
|
|
(6,095 |
) |
|
|
6,095 |
|
|
|
(6,095 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
% |
Consolidated Funds(2) |
|
|
— |
|
|
|
215 |
|
|
|
(3,623 |
) |
|
|
(755 |
) |
|
|
(2,055 |
) |
|
|
(0.75 |
) |
|
|
— |
|
Other investment income(3) |
|
|
— |
|
|
|
— |
|
|
|
(20,827 |
) |
|
|
(5,597 |
) |
|
|
(15,230 |
) |
|
|
(5.60 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted Non-GAAP basis |
|
$ |
104,267 |
|
|
$ |
43,046 |
|
|
$ |
— |
|
|
$ |
11,569 |
|
|
$ |
31,477 |
|
|
$ |
11.56 |
|
|
|
29 |
% |
40
Table of Contents
|
|
Year Ended December 31, 2024 |
|
|||||||||||||||||||||||||
(in thousands, except percentages and per share data) |
|
Total |
|
|
Net operating |
|
|
Total non- |
|
|
Income tax |
|
|
Net income |
|
|
Earnings per |
|
|
Net |
|
|||||||
GAAP Basis |
|
$ |
107,203 |
|
|
$ |
43,892 |
|
|
$ |
15,119 |
|
|
$ |
15,833 |
|
|
$ |
43,178 |
|
|
$ |
15.66 |
|
|
|
29 |
% |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Deferred compensation liability (1) |
|
|
(4,776 |
) |
|
|
4,776 |
|
|
|
(4,776 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
% |
Consolidated Funds(2) |
|
|
— |
|
|
|
28 |
|
|
|
199 |
|
|
|
61 |
|
|
|
165 |
|
|
|
0.06 |
|
|
|
— |
|
Other investment income(3) |
|
|
— |
|
|
|
— |
|
|
|
(10,542 |
) |
|
|
(2,825 |
) |
|
|
(7,717 |
) |
|
|
(2.80 |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted Non-GAAP basis |
|
$ |
102,427 |
|
|
$ |
48,696 |
|
|
$ |
— |
|
|
$ |
13,069 |
|
|
$ |
35,626 |
|
|
$ |
12.92 |
|
|
|
32 |
% |
|
|
Year Ended December 31, 2023 |
|
|||||||||||||||||||||||||
(in thousands, except percentages and per share data) |
|
Total |
|
|
Net operating |
|
|
Total non- |
|
|
Income tax |
|
|
Net income |
|
|
Earnings per |
|
|
Net |
|
|||||||
GAAP Basis |
|
$ |
101,212 |
|
|
$ |
35,504 |
|
|
$ |
23,071 |
|
|
$ |
15,490 |
|
|
$ |
42,226 |
|
|
$ |
14.32 |
|
|
|
26 |
% |
Non-GAAP Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Deferred compensation liability(1) |
|
|
(5,600 |
) |
|
|
5,600 |
|
|
|
(5,600 |
) |
|
— |
|
|
— |
|
|
— |
|
|
|
4 |
% |
|||
Consolidated Funds(2) |
|
— |
|
|
|
330 |
|
|
|
(4,148 |
) |
|
|
(793 |
) |
|
|
(2,166 |
) |
|
|
(0.73 |
) |
|
— |
|
||
Other investment income(3) |
|
— |
|
|
— |
|
|
|
(13,323 |
) |
|
|
(3,571 |
) |
|
|
(9,752 |
) |
|
|
(3.31 |
) |
|
— |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted Non-GAAP Basis |
|
$ |
95,612 |
|
|
$ |
41,434 |
|
|
$ |
— |
|
|
$ |
11,126 |
|
|
$ |
30,308 |
|
|
$ |
10.28 |
|
|
|
30 |
% |
Critical Accounting Estimates
The preparation of financial statements requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures of contingent assets and liabilities. The Company evaluates such estimates, judgments, and assumptions on an ongoing basis, and bases its estimates, judgments, and assumptions on historical experiences, current trends, and various other factors that it believes to be reasonable under the circumstances. By their nature, these estimates, judgments, and assumptions are subject to uncertainty, and actual results may differ materially from these estimates.The following accounting estimates are considered to be the most critical to the Company, as these are the primary areas where financial information is subject to the Company’s estimates, assumptions and judgment in the preparation of our consolidated financial statements.
41
Table of Contents
Consolidation. The Company consolidates all subsidiaries and certain investments in which the Company has a controlling interest. The Company is generally deemed to have a controlling interest when it owns the majority of the voting interest of a voting rights entity (“VRE”) or are deemed to be the primary beneficiary of a variable interest entity (“VIE”). A VIE is an entity that lacks sufficient equity to finance its activities, or any entity whose equity holders do not have defined power to direct the activities of the entity normally associated with an equity investment. The Company’s analysis to determine whether an entity is a VIE or a VRE involves judgment and considers several factors, including an entity’s legal organization, equity structure, the rights of the investment holders, the Company’s ownership interest in the entity, and its contractual involvement with the entity. The Company continually reviews and reconsiders its VIE or VRE conclusions upon the occurrence of certain events, such as changes to its ownership interest, or amendments to contract documents.
Provisions for Income Taxes. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements or tax returns. Judgment is required in assessing the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.
Revenue Recognition when Acting as an Agent vs. Principal. The Proprietary Funds have selected and contractually engaged certain vendors to fulfill various services to benefit the Proprietary Funds’ shareholders or to satisfy regulatory requirements of the Proprietary Funds. These services include, among others, required fund shareholder mailings, registration services, and legal and audit services. DHCM, in fulfilling a portion of its role under the administration agreements with the Proprietary Funds, acts as agent to pay these obligations of the Proprietary Funds. Each vendor is independently responsible for fulfillment of the services it has been engaged to provide and negotiates fees and terms with the management and board of trustees of each Proprietary Fund. The fee that the Proprietary Funds pay to DHCM is reviewed annually by the Proprietary Funds’ respective boards of trustees and specifically considers the contractual expenses that DHCM pays on behalf of the Proprietary Funds. As a result, DHCM is not involved in the delivery or pricing of these services and bears no risk related to these services. Revenue has been recorded net of these Proprietary Fund expenses, as appropriate for this agency relationship.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company’s revenues and net income are based primarily on the value of its AUM. Accordingly, declines in financial market values directly and negatively impact its investment advisory revenues and net income.
The Company invests in its investment strategies, which are market risk sensitive financial instruments. These investments have inherent market risk in the form of price risk due to the potential future loss of value that would result from a decline in their fair value. Market prices fluctuate, and the amount realized upon subsequent sale may differ significantly from the reported market value.
The table below summarizes the Company’s market risks as of December 31, 2025, and shows the effects of a hypothetical 10% increase and decrease in investments.
|
|
|
|
|
Fair Value |
|
|
Fair Value |
|
|||
|
|
|
|
|
Assuming a |
|
|
Assuming a |
|
|||
|
|
Fair Value as of |
|
|
Hypothetical |
|
|
Hypothetical |
|
|||
|
|
December 31, 2025 |
|
|
10% Increase |
|
|
10% Decrease |
|
|||
Equity investments |
|
$ |
98,515,280 |
|
|
$ |
108,366,808 |
|
|
$ |
88,663,752 |
|
Fixed Income investments |
|
|
78,882,941 |
|
|
|
86,771,235 |
|
|
|
70,994,647 |
|
Total |
|
$ |
177,398,221 |
|
|
$ |
195,138,043 |
|
|
$ |
159,658,399 |
|
42
Table of Contents
ITEM 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (KPMG LLP, Columbus, OH, Auditor Firm ID: |
44 |
Consolidated Balance Sheets as of December 31, 2025 and 2024 |
46 |
Consolidated Statements of Income for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 |
47 |
Consolidated Statements of Shareholders’ Equity and Redeemable Noncontrolling Interest for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 |
48 |
Consolidated Statements of Cash Flows for the years ended December 31, 2025, December 31, 2024, and December 31, 2023 |
49 |
Notes to Consolidated Financial Statements |
50 |
43
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Diamond Hill Investment Group, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Diamond Hill Investment Group, Inc. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, shareholders’ equity and redeemable noncontrolling interest, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Evaluation of the assets under management data used in the calculation of investment advisory fee revenue for separately managed accounts, collective investment trusts and other pooled vehicles
As discussed in Note 2 to the consolidated financial statements, the Company recognizes investment advisory fee revenue for its separately managed accounts, collective investment trusts and other pooled vehicles based on a percentage of its assets under management (AUM). The Company recognized $38.5 million in investment advisory fees related to separately managed accounts, collective investment trusts and other pooled vehicles during the year ended December 31, 2025. AUM is an input to the calculation of the investment advisory fee revenue. Specifically, as it pertains to these accounts, the inputs to the AUM calculation and the calculated
44
Table of Contents
AUM value are transmitted through multiple information technology (IT) systems used in the calculation of investment advisory fee revenue.
We identified the evaluation of the AUM data used in the calculation of separately managed accounts, collective investment trusts and other pooled vehicles investment advisory fee revenue as a critical audit matter. There is a high degree of auditor judgment required to perform procedures to address the Company’s use of multiple IT systems to maintain the AUM data, including the use of professionals with specialized skills and knowledge to test the AUM data processed through multiple IT systems.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the inputs to the AUM calculation, as well as controls that reconcile AUM between IT systems. We involved IT professionals with specialized skills and knowledge, who assisted in the testing of application and related general IT controls relevant to the IT systems used to maintain AUM data. We compared AUM used in the calculation of investment advisory fees to the source IT systems for a selection of accounts.
/s/
We have served as the Company’s auditor since 2012.
February 26, 2026
45
Table of Contents
Diamond Hill Investment Group, Inc.
Consolidated Balance Sheets
|
|
December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
|
|
|
|
|
||
ASSETS |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Investments |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
|
||
Prepaid expenses |
|
|
|
|
|
|
||
Income taxes receivable |
|
|
|
|
|
|
||
Property and equipment, net of depreciation |
|
|
|
|
|
|
||
Deferred taxes |
|
|
|
|
|
|
||
Total assets |
|
$ |
|
|
$ |
|
||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Liabilities |
|
|
|
|
|
|
||
Accounts payable and accrued expenses |
|
$ |
|
|
$ |
|
||
Accrued incentive compensation |
|
|
|
|
|
|
||
Lease liability |
|
|
|
|
|
|
||
Deferred compensation |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
Redeemable noncontrolling interest |
|
|
|
|
|
|
||
Permanent Shareholders’ Equity |
|
|
|
|
|
|
||
Common shares, |
|
|
|
|
|
|
||
Preferred shares, undesignated: |
|
|
|
|
|
|
||
Deferred equity compensation |
|
|
( |
) |
|
|
( |
) |
Retained earnings |
|
|
|
|
|
|
||
Total permanent shareholders’ equity |
|
|
|
|
|
|
||
Total liabilities and shareholders’ equity |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these consolidated financial statements.
46
Table of Contents
Diamond Hill Investment Group, Inc.
Consolidated Statements of Income
|
|
|
Year ended December 31, |
|
|||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
REVENUES: |
|
|
|
|
|
|
|
|
|
|
|||
Investment advisory |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Fund administration, net |
|
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
|
|
|
|
|
|
|
|
|
|||
OPERATING EXPENSES: |
|
|
|
|
|
|
|
|
|
|
|||
Compensation and related costs, excluding deferred |
|
|
|
|
|
|
|
|
|
|
|||
Deferred compensation expense |
|
|
|
|
|
|
|
|
|
|
|||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|||
Fund administration |
|
|
|
|
|
|
|
|
|
|
|||
Total operating expenses |
|
|
|
|
|
|
|
|
|
|
|||
NET OPERATING INCOME |
|
|
|
|
|
|
|
|
|
|
|||
NON-OPERATING INCOME |
|
|
|
|
|
|
|
|
|
|
|||
Investment income, net |
|
|
|
|
|
|
|
|
|
|
|||
Total non-operating income |
|
|
|
|
|
|
|
|
|
|
|||
NET INCOME BEFORE TAXES |
|
|
|
|
|
|
|
|
|
|
|||
Income tax expense |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
NET INCOME |
|
|
|
|
|
|
|
|
|
|
|||
Net income attributable to redeemable noncontrolling interest |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
NET INCOME ATTRIBUTABLE TO COMMON |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Earnings per share attributable to common shareholders |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Diluted |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
|
|
|
|
|
|
|
|
|||
Diluted |
|
|
|
|
|
|
|
|
|
|
|||
The accompanying notes are an integral part of these consolidated financial statements.
47
Table of Contents
Diamond Hill Investment Group, Inc.
|
|
|
|
|
|
|
||||||||||||||||||
|
|
Shares |
|
|
Common |
|
|
Deferred |
|
|
Retained |
|
|
Total |
|
|
Redeemable |
|
||||||
Balance at December 31, 2022 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Issuance of restricted share grants |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Amortization of restricted share grants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Issuance of common shares related to |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Issuance of common shares related to |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Shares withheld related to employee |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Forfeiture of restricted share grants |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Repurchase of common shares |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Cash dividends paid of $6.00 per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Net deconsolidations of Company sponsored investments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net subscriptions of Consolidated Funds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Balance at December 31, 2023 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Issuance of restricted share grants |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Amortization of restricted share grants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Issuance of common shares related to |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Shares withheld related to employee |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Forfeiture of restricted share grants |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Repurchase of common shares |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Cash dividends paid of $6.00 per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Net subscriptions of Consolidated Funds |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Balance at December 31, 2024 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Issuance of restricted share grants |
|
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
||
Amortization of restricted share grants |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Issuance of common shares related to |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|||
Shares withheld related to employee |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
Forfeiture of restricted share grants |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Repurchase of common shares |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Cash dividends paid of $10.00 per share |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Net deconsolidations of Company |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Net subscriptions of Consolidated |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Balance at December 31, 2025 |
|
|
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|||||
The accompanying notes are an integral part of these consolidated financial statements.
48
Table of Contents
Diamond Hill Investment Group, Inc.
Consolidated Statements of Cash Flows
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
|
|
|
|||
Depreciation |
|
|
|
|
|
|
|
|
|
|||
Share-based compensation |
|
|
|
|
|
|
|
|
|
|||
(Increase) decrease in accounts receivable |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Change in current income taxes |
|
|
|
|
|
|
|
|
( |
) |
||
Change in deferred income taxes |
|
|
|
|
|
|
|
|
|
|||
Net gain on investments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net change in securities held by Consolidated Funds |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Increase (decrease) in accrued incentive compensation |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Increase in deferred compensation |
|
|
|
|
|
|
|
|
|
|||
Other changes in assets and liabilities |
|
|
|
|
|
( |
) |
|
|
|
||
Net cash provided by (used in) operating activities |
|
|
( |
) |
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|||
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Purchase of Company sponsored investments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of Company sponsored investments |
|
|
|
|
|
|
|
|
|
|||
Net cash provided by (used in) investing activities |
|
|
|
|
|
|
|
|
( |
) |
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|||
Value of shares withheld related to employee tax withholding obligations |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Payment of dividends |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Redemptions of redeemable noncontrolling interest holders |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
Subscriptions received from redeemable noncontrolling interest holders |
|
|
|
|
|
|
|
|
|
|||
Repurchases of common shares |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Proceeds received under employee stock purchase plan |
|
|
|
|
|
|
|
|
|
|||
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
CASH AND CASH EQUIVALENTS |
|
|
|
|
|
|
|
|
|
|||
Net change during the year |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
At beginning of year |
|
|
|
|
|
|
|
|
|
|||
At end of year |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Supplemental information related to cash activities: |
|
|
|
|
|
|
|
|
|
|||
Income taxes paid |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Supplemental information related to non-cash activities |
|
|
|
|
|
|
|
|
|
|||
Operating lease right-of-use asset addition, net of lease incentive |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Lease incentives included in property and equipment |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The accompanying notes are an integral part of these consolidated financial statements.
49
Table of Contents
Diamond Hill Investment Group, Inc.
Notes to Consolidated Financial Statements
Note 1 Business and Organization
DHIL derives its consolidated revenues and net income from investment advisory and fund administration services provided by DHCM. DHCM is a registered investment adviser. DHCM is the investment adviser and administrator for the Proprietary Funds. DHCM also provides investment advisory services to DHMF, SMAs, CITs, other pooled vehicles including sub-advised funds, and model delivery programs.
Note 2 Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the SEC and in accordance with the instructions to Form 10-K. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading.
Use of Estimates
Reclassification
Certain prior period amounts and disclosures may have been reclassified to conform to the current period’s financial presentation.
Prior to January 1, 2024, the Company recorded share repurchases as a reduction to common shares in permanent shareholders’ equity. Effective January 1, 2024, share repurchases have been recorded as a reduction to retained earnings in permanent shareholders’ equity. The Company has not reclassified any share repurchases included in common shares prior to January 1, 2024. The change did not have an impact on total shareholders’ equity.
Principles of Consolidation
The accompanying consolidated financial statements include the operations of DHIL and its consolidated subsidiaries. All inter-company transactions and balances have been eliminated in consolidation.
DHCM holds certain investments in the Proprietary Funds and DHMF for general corporate investment purposes, to provide seed capital for newly formed strategies, or to add capital to existing strategies. The Diamond Hill Funds are organized in a series fund structure in which there are multiple mutual funds and an ETF within one trust (the “Trust”). The Trust is an open-end investment company registered under the Company Act. Each individual Diamond Hill Fund represents a separate share class of a legal entity organized under the Trust. DHSC is organized as a Delaware statutory trust and is a closed-end investment company registered under the Company Act. DHMF is organized as a Delaware limited partnership and is exempt from registration under the Company Act.
DHIL consolidates those subsidiaries and investments over which it has a controlling interest. The Company is generally deemed to have a controlling interest when it owns the majority of the voting interest of a VRE or is deemed to be the primary beneficiary of a VIE. A VIE is an entity that lacks sufficient equity to finance its activities, or any entity whose equity holders do not have defined power to direct the activities of the entity normally associated with an equity investment. The Company’s analysis to determine whether
50
Table of Contents
an entity is a VIE or a VRE involves judgment and consideration of several factors, including an entity’s legal organization, equity structure, the rights of the investment holders, the Company’s ownership interest in the entity, and the Company’s contractual involvement with the entity. The Company continually reviews and reconsiders its controlling interest, VIE or VRE conclusions upon the occurrence of certain events, such as changes to its ownership interest, or amendments to contract documents.
The Company performs its consolidation analysis at the individual fund level and has concluded that the Proprietary Funds are VREs because the structure of the Proprietary Funds is such that the shareholders are deemed to have the power through voting rights to direct the activities that most significantly impact each Proprietary Fund’s economic performance. The Proprietary Funds are consolidated if DHIL ownership, directly or indirectly, represents a majority interest (greater than
As of December 31, 2025, as well as during the year ended December 31, 2025, the Company consolidated the Diamond Hill Securitized Total Return Fund. As of December 31, 2024, the Company consolidated the Diamond Hill Core Plus Bond Fund. The Company consolidated the Diamond Hill Core Plus Bond Fund for the six-months ended June 30, 2025, and effective July 1, 2025, deconsolidated the fund as the Company's ownership dropped below
DHCM is the investment advisor of DHMF and is the managing member of Diamond Hill Fund GP, LLC (the “General Partner”), which is the general partner of DHMF. DHCM is wholly owned by, and consolidated with, DHIL. Further, through its control of the General Partner, DHCM has the power to direct DHMF’s economic activities and the right to receive investment advisory fees from DHMF that may be significant. DHMF's underlying assets consist primarily of marketable securities.
The Company concluded DHMF was a VIE given that: (i) DHCM has disproportionately less voting interest than economic interest, and (ii) DHMF’s limited partners have full power to remove the General Partner (which is controlled by DHCM, which is controlled by DHIL) due to the existence of substantive kick-out rights. In addition, substantially all of DHMF’s activities are conducted on behalf of the General Partner, which has disproportionately few voting rights. The Company concluded it is not the primary beneficiary of DHMF as it lacks the power to control DHMF, since DHMF’s limited partners have single-party kick-out rights and can unilaterally remove the General Partner without cause. DHCM’s investments in DHMF are reported as a component of the Company’s investment portfolio and valued at DHCM’s respective share of DHMF's net income or loss.
Gains and losses attributable to changes in the value of DHCM’s interests in DHMF are included in the Company’s reported investment income. The Company’s exposure to loss as a result of its involvement with DHMF is limited to the amount of its investment. DHCM is not obligated to provide, and has not provided, financial or other support to DHMF, except for its investments to date and its contractually provided investment advisory responsibilities. The Company has not provided liquidity arrangements, guarantees, or other commitments to support DHMF’s operations, and DHMF’s creditors and interest holders have no recourse to the general credit of the Company.
Redeemable Noncontrolling Interest
Segment Information
Management has determined that the Company operates in a business segment, which is providing investment advisory and fund administration services. The Chief Operating Decision Maker (“CODM”) is the who evaluates the performance of the business and allocates resources using a single, consolidated internal reporting structure.
51
Table of Contents
The accounting policies of the segment are the same as those described in this Note 2.
The CODM does not review Company assets in evaluating the results of the single business segment, therefore, no additional asset information is presented.
For information regarding how the Company generates revenue, and its revenues by source, see Note 2, Revenue Recognition - General. Substantially all of the Company’s revenue is generated from clients in the U.S., and all long-lived assets are located in the U.S.
Risks and Uncertainties
Substantially all of the Company’s revenues are derived from investment advisory and fund administration fees, which are based primarily on the value of AUM and AUA. Accordingly, the Company’s operating results are sensitive to changes in market conditions, client flows, and investment performance.
A significant portion of the Company’s AUM, AUA, and revenues is concentrated in its U.S. equity strategies, particularly the Diamond Hill Large Cap strategy. As of December 31, 2025, the Large Cap strategy represented a substantial percentage of the Company’s total AUM and investment advisory fee revenue. Changes in investment performance, client asset allocation decisions, or redemption activity affecting this strategy could have a disproportionate impact on the Company’s revenues and operating results.
During recent periods, the Company has experienced elevated net outflows in certain equity strategies, including Large Cap. While market appreciation and inflows into other strategies may partially offset the impact of such outflows, there can be no assurance that these factors will be sufficient to mitigate the effects of sustained reductions in AUM. A significant decline in AUM in the Company’s larger strategies could materially and adversely affect future revenues and cash flows.
Cash and Cash Equivalents
Cash and cash equivalents include demand deposits and money market mutual funds held by DHCM. The Company considers all highly liquid temporary cash instruments with an original maturity of three months or less to be cash equivalents. The Company places its cash on deposit with U.S. financial institutions that are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $
Accounts Receivable
The Company records accounts receivable when they are due and presents them on the balance sheet net of any allowance for doubtful accounts. Accounts receivable are written off when they are determined to be uncollectible. Any allowance for doubtful accounts is estimated based on the Company’s historical losses, existing conditions in the industry, and the financial stability of the individual or entity that owes the receivable.
Investments
Management determines the appropriate classification of the Company’s investments at the time of purchase and re-evaluates its determination for each reporting period.
52
Table of Contents
Company sponsored investments, where the Company has neither the control nor the ability to exercise significant influence, as well as securities held in the Consolidated Funds, are measured at fair value based on quoted market prices. Unrealized gains and losses are recorded as investment income (loss) in the Company's consolidated statements of income.
Investments classified as equity method investments represent investments in which the Company owns 20% to 50% of the outstanding voting interests in the entity or where it is determined that the Company is able to exercise significant influence but not control over the investments. When using the equity method, the Company recognizes its respective share of the investee’s net income or loss for the period, which is recorded as investment income (loss) in the Company’s consolidated statements of income.
Property and Equipment
Property and equipment, consisting of leasehold improvements, right-of-use lease assets, computer equipment, capitalized software, furniture, and fixtures are carried at cost less accumulated depreciation.
Property, plant and equipment consist of the following as of December 31, 2025 and December 31, 2024:
|
As of December 31, |
|
|||||
|
2025 |
|
|
2024 |
|
||
Furniture and Fixtures |
$ |
|
|
$ |
|
||
Software and Hardware |
|
|
|
|
|
||
Construction in Progress |
|
|
|
|
|
||
Right of Use Lease Asset |
|
|
|
|
|
||
Total |
|
|
|
|
|
||
Less: Accumulated Depreciation |
|
( |
) |
|
|
( |
) |
Net Property, Plant and Equipment |
$ |
|
|
$ |
|
||
Depreciation expense for the years ended December 31, 2025 and 2024 was $
The Company depreciates its property, plant, and equipment on a straight-line basis over the following estimated useful lives:
Construction in Progress includes costs incurred for leasehold improvements to the Company’s leased office space and internally developed software.
Implementation costs incurred to develop or obtain internal-use software, including hosting arrangements, are capitalized and expensed on a straight-line basis over either the estimated useful life of the respective software or the term of the hosting arrangement.
Property and equipment is tested for impairment when there is an indication that the carrying amount of an asset may not be recoverable. When an asset is determined to not be recoverable, the impairment loss is measured based on the excess, if any, of the carrying value of the asset over its fair value.
Revenue Recognition – General
The Company recognizes revenue when DHCM satisfies performance obligations under the terms of a contract with a client. The Company earns substantially all of its revenue from DHCM investment advisory and fund administration contracts. Investment advisory and fund administration fees, generally calculated as a percentage of AUM, are recorded as revenue as services are performed.
53
Table of Contents
Revenue from contracts with clients that was earned during the years ended December 31, 2025, 2024 and 2023 include:
|
|
Year Ended December 31, 2025 |
|
|||||||||
|
|
Investment advisory |
|
|
Fund |
|
|
Total revenue |
|
|||
Proprietary Funds |
|
$ |
|
|
$ |
|
|
$ |
|
|||
SMAs |
|
|
|
|
|
|
|
|
|
|||
Other pooled vehicles |
|
|
|
|
|
|
|
|
|
|||
CITs |
|
|
|
|
|
|
|
|
|
|||
Model delivery |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Year Ended December 31, 2024 |
|
|||||||||
|
|
Investment advisory |
|
|
Fund |
|
|
Total revenue |
|
|||
Proprietary Funds |
|
$ |
|
|
$ |
|
|
$ |
|
|||
SMAs |
|
|
|
|
|
|
|
|
|
|||
Other pooled vehicles |
|
|
|
|
|
|
|
|
|
|||
CITs |
|
|
|
|
|
|
|
|
|
|||
Model delivery |
|
|
|
|
|
|
|
|
|
|||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
Year Ended December 31, 2023 |
|
|||||||||
|
|
Investment advisory |
|
|
Fund |
|
|
Total revenue |
|
|||
Proprietary Funds |
|
$ |
|
|
$ |
|
|
$ |
|
|||
SMAs |
|
|
|
|
|
|
|
|
||||
Other pooled vehicles |
|
|
|
|
|
|
|
|
||||
Model delivery |
|
|
|
|
|
|
|
|
||||
CITs |
|
|
|
|
|
|
|
|
||||
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Revenue Recognition – Investment Advisory Fees
DHCM’s investment advisory contracts with clients have a single performance obligation because the contracted services are not separately identifiable from other obligations in the contracts, and therefore, are not distinct. All obligations to provide investment advisory services are satisfied over time by DHCM.
The fees DHCM receives for its services under its investment advisory contracts are based on AUM, which changes based on the value of securities held under each investment advisory contract. These fees are thereby constrained and represent variable consideration, and they are excluded from revenue until the AUM on which DHCM’s client is billed is no longer subject to market fluctuations.
DHCM also provides its strategy model portfolios and related services to sponsors of model delivery programs. For its services, DHCM is paid a model delivery fee by the program sponsor at a pre-determined rate based on the amount of AUA in the program.
Revenue Recognition – Fund Administration
DHCM has administrative and transfer agency services agreements with the Diamond Hill Funds and DHSC and an administrative services agreement with the Diamond Hill Large Cap Concentrated ETF under which DHCM performs certain services for each Proprietary Fund (collectively, the “Administration Agreements”). These services include performance obligations, such as fund administration, fund accounting, transfer agency (except for the Diamond Hill Large Cap Concentrated ETF), and other related functions. These services are performed concurrently under the Administration Agreements. DHCM satisfies all performance obligations to provide these administrative services over time, and the Company recognizes the related revenue as time progresses. Each Proprietary Fund pays DHCM a fee for performing these services, which is calculated using an annual rate multiplied by the average daily net assets
54
Table of Contents
of each respective fund share class. These fees are thereby constrained and represent variable consideration, and are excluded from revenue until the AUM on which DHCM bills the Proprietary Funds is no longer subject to market fluctuations.
The Proprietary Funds have selected and contractually engaged certain vendors to fulfill various services to benefit the Proprietary Funds’ shareholders or to satisfy regulatory requirements of the Proprietary Funds. These services include, among others, required shareholder mailings, federal and state registrations, and legal and audit services. In fulfilling a portion of its role under the Administration Agreements, DHCM acts as agent and pays for these services on behalf of the Proprietary Funds. Each vendor is independently responsible for fulfillment of the services it has been engaged to provide and negotiates its fees and terms directly with the Proprietary Funds’ officers and respective boards of trustees. Each year, the Proprietary Funds’ respective boards of trustees review the fee that each fund pays to DHCM, and specifically considers the contractual expenses that DHCM pays on behalf of the Proprietary Funds. As a result, DHCM is not involved in the delivery or pricing of these services, and bears no risk related to these services. Revenue has been recorded net of these fund-related expenses.
Fund administration gross and net revenue are summarized below:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Fund administration: |
|
|
|
|
|
|
|
|
|
|||
Administration revenue, gross |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Fund related expense |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Fund administration revenue, net |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Income Taxes
The Company accounts for current and deferred income taxes through an asset and liability approach. Deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The Company is subject to examination by federal and applicable state and local jurisdictions for various tax periods. The Company’s income tax positions are based on research and interpretations of the income tax laws and rulings in each of the jurisdictions in which it does business. Due to the subjectivity of interpretations of laws and rulings in each jurisdiction, the differences and interplay in tax laws among those jurisdictions, and the inherent uncertainty in estimating the final resolution of complex tax audit matters, the Company’s estimates of income tax liabilities may differ materially from actual payments or assessments. The Company regularly assesses its positions with regard to tax exposures and records liabilities for these uncertain tax positions and related interest and penalties, if any, according to the principles of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes. The Company records interest and penalties within income tax expense on the income statement. See Note 9.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBB Act”), encompassing a wide array of tax reform measures, was enacted in the U.S. The OBBB Act did not materially affect the Company’s annual effective tax rate for 2025.
Earnings Per Share
Recently Adopted Accounting Guidance
In 2025, the Company
55
Table of Contents
rate reconciliation and income taxes paid. The adoption of this guidance did
Newly Issued But Not Yet Adopted Accounting Guidance
In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures” ("ASU 2024-03"). ASU 2024-03 requires entities to disaggregate any relevant expense caption presented on the face of the income statement within continuing operations into the following required natural expense categories, as applicable: (1) purchases of inventory, (2) employee compensation, (3) depreciation, (4) intangible asset amortization, and (5) depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion expenses. ASU 2024-03 is effective for financial statements issued for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements and related disclosures. While the Company has not yet completed its assessment, the adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.
Note 3 Investments
The following table summarizes the carrying value of the Company’s investments as of December 31, 2025 and 2024:
|
|
As of December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Fair value investments: |
|
|
|
|
|
|
||
Securities held in Consolidated Funds(a) |
|
$ |
|
|
$ |
|
||
Company-sponsored investments |
|
|
|
|
|
|
||
Company-sponsored equity method investments |
|
|
|
|
|
|
||
Total Investments |
|
$ |
|
|
$ |
|
||
As of December 31, 2025, the Company consolidated the Diamond Hill Securitized Total Return Fund. As of December 31, 2024, the Company consolidated the Diamond Hill Core Plus Bond Fund.
The components of net investment income are as follows:
|
|
Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Realized gains |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Change in unrealized |
|
|
|
|
|
|
|
|
|
|||
Dividends |
|
|
|
|
|
|
|
|
|
|||
Interest income |
|
|
|
|
|
|
|
|
|
|||
Other |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Investment income, net |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Company-Sponsored Equity Method Investments
As of December 31, 2025, the Company’s equity method investments consisted of DHMF, the Diamond Hill International Fund, the Diamond Hill Core Plus Bond Fund, and the Diamond Hill Large Cap Concentrated ETF. The Company’s ownership percentage in each of these investments was
56
Table of Contents
As of December 31, 2024, the Company’s equity method investments consisted of DHMF, the Diamond Hill International Fund, and the Diamond Hill Large Cap Concentrated Fund. The Company’s ownership percentage in each of these investments was
As of December 31, 2023, the Company’s equity method investments consisted of DHMF, the Diamond Hill International Fund, and the Diamond Hill Large Cap Concentrated Fund. The Company’s ownership percentage in each of these investments was
The following table includes the condensed summary financial information from the Company’s equity method investments as of December 31, 2025 and 2024, and for the years ended December 31, 2025, 2024, and 2023:
|
|
As of December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Total assets |
|
$ |
|
|
$ |
|
||
Total liabilities |
|
|
|
|
|
|
||
Net assets |
|
|
|
|
|
|
||
DHCM’s portion of net assets |
|
$ |
|
|
$ |
|
||
|
|
For the Year Ended December 31, |
|
|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Investment income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Expenses |
|
|
|
|
|
|
|
|
|
|||
Net realized gains |
|
|
|
|
|
|
|
|
|
|||
Change in unrealized |
|
|
|
|
|
|
|
|
|
|||
Net income |
|
|
|
|
|
|
|
|
|
|||
DHCM’s portion of net income |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Note 4 Fair Value Measurements
The Company determines the fair value of its cash equivalents and certain investments using the following broad levels listed below:
Level 1 - Unadjusted quoted prices for identical instruments in active markets.
Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-driven valuations in which all significant inputs are observable.
Level 3 - Valuations derived from techniques in which significant inputs are unobservable. The Company does not value any investments using Level 3 inputs.
These levels are not necessarily an indication of the risk or liquidity associated with investments.
57
Table of Contents
The following table summarizes investments that are recognized in the Company’s consolidated balance sheet using fair value measurements (excludes investments classified as equity method investments) determined based upon the differing levels as of December 31, 2025 and 2024:
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||
Fair value investments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities held in Consolidated Funds(a) |
|
$ |
|
|
|
|
|
|
|
|
|
|
||||
Company-sponsored investments |
|
$ |
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value investments |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securities held in Consolidated Funds(a) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Company-sponsored investments |
|
$ |
|
|
|
|
|
|
|
|
$ |
|
||||
Changes to fair values of the investments are recorded in the Company’s consolidated statements of income as investment income, net.
Note 5 Line of Credit
The Company has a committed Line of Credit Agreement (“Credit Agreement”) with a commercial bank that matures on December 9, 2026, which permits the Company to borrow up to $
The proceeds of the Credit Agreement may be used by the Company and its subsidiaries for ongoing working capital needs, to seed new and existing investment strategies, and for other general corporate purposes. The Credit Agreement contains customary representations, warranties, and covenants.
The Company did not borrow under the Credit Agreement during 2025, and no borrowings were outstanding as of December 31, 2025.
Note 6 Capital Stock
Common Shares
DHIL has only one class of securities outstanding, common shares, no par value per share.
Authorization of Preferred Shares
DHIL’s Amended and Restated Articles of Incorporation authorize the issuance of
58
Table of Contents
Note 7 Compensation Plans
Share-Based Payment Transactions
The Company maintains the shareholder-approved Diamond Hill Investment Group, Inc. 2025 Equity and Cash Incentive Plan (the “2025 Plan”) which authorizes the issuance of up to
Restricted share grants represent DHIL common shares issued and outstanding upon grant that remain subject to restrictions until specified vesting conditions are satisfied. The Company issues to all new Company employees upon hire restricted shares, and may issue additional restricted shares to certain key employees from time to time, that cliff vest after
Restricted share awards provide for accelerated vesting upon a change in control of the Company, as defined in the applicable award agreements. No change in control had occurred as of December 31, 2025, and accordingly, no accelerated vesting or incremental share-based compensation cost was recognized in the accompanying consolidated financial statements for the year ended December 31, 2025.
Restricted shares are valued based upon the fair market value of the common shares on the applicable grant date. The restricted shares are recorded as deferred compensation in the equity section of the balance sheet on the grant date and then recognized as compensation expense on a straight-line basis over the vesting period of the respective grant. The Company accounts for forfeitures as they occur and does not estimate forfeitures at the grant date.
Holders of unvested restricted shares are entitled to receive cash dividends, if and when declared, on the same basis as holders of vested common shares. Such dividend rights are nonforfeitable and are recognized as compensation expense when paid.
Compensation and related costs, excluding deferred compensation expense (benefit) includes expenses related to restricted shares of $
The following table represents a roll-forward of outstanding restricted shares and related activity for 2025:
|
|
Shares |
|
|
Weighted-Average |
|
||
Outstanding Restricted Shares as of December 31, 2024 |
|
|
|
|
$ |
|
||
Grants issued |
|
|
|
|
|
|
||
Grants vested |
|
|
( |
) |
|
|
|
|
Grants forfeited |
|
|
( |
) |
|
|
|
|
Outstanding Restricted Shares as of December 31, 2025 |
|
|
|
|
$ |
|
||
The weighted-average grant date price per share of restricted shares issued during the years ended December 31, 2024 and 2023 was $
Total deferred equity compensation related to unvested restricted shares was $
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
2026 |
|
|
2027 |
|
|
2028 |
|
|
2029 |
|
|
2030 |
|
|
Thereafter |
|
|
Total |
|
|||||||
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
59
Table of Contents
Employee Stock Purchase Plan
Under the ESPP, eligible employees may purchase DHIL common shares at
As of December 31, 2025,
401(k) Plan
The Company sponsors a 401(k) plan in which all Company employees are eligible to participate. Company employees may contribute a portion of their compensation subject to certain limits based on federal tax laws. The Company matches employee contributions equal to
|
|
Shares Issued |
|
|
Share |
|
|
Cash |
|
|
Total Company |
|
||||
December 31, 2025 |
|
|
|
|
|
|
|
$ |
|
|
$ |
|
||||
December 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
December 31, 2023 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Deferred Compensation Plans
Under the Deferred Compensation Plans, participants may elect to voluntarily defer, for a minimum of
Deferred compensation liability was $
Note 8 Operating Lease
On July 31, 2024, the Company entered into a
As of December 31, 2025 and December 31, 2024, the carrying value of the right-of-use asset, which is included in on the consolidated balance sheets, was approximately $
60
Table of Contents
The carrying value of the lease liability includes both principal and accrued interest on lease payments that are due in the current and future periods. Lease liability is measured at the present value of the remaining lease payments, discounted using the discount rate determined at the lease commencement date. For operating leases, interest on the lease liability is included within operating lease cost and is not presented separately.
As of December 31, 2025, the weighted average discount rate applied to the Company’s lease liability was
The following table summarizes the total lease and operating expenses for the years ended December 31, 2025, 2024 and 2023:
For the year ended December 31, |
|
|||||||||
2025 |
|
|
2024 |
|
|
2023 |
|
|||
$ |
|
|
$ |
|
|
$ |
|
|||
Cash paid for operating leases included in operating cash flows was $
The following table provides a maturity analysis of the Company’s operating lease liability, based on undiscounted cash flows, as of December 31, 2025:
|
|
December 31, 2025 |
|
|
2026 |
|
|
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
2031 and Thereafter |
|
|
|
|
Total undiscounted operating lease payments |
|
|
|
|
Less: Imputed interest |
|
|
( |
) |
Present value of operating lease liability |
|
$ |
|
|
Note 9 Income Taxes
The provision for income taxes consists of the following:
For the year ended December 31, |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Current federal income tax provision |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Current state and local income tax expense |
|
|
|
|
|
|
|
|
|
|||
Deferred income tax expense (benefit) |
|
|
|
|
|
|
|
|
|
|||
Provision for income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Net income before income taxes and income tax expense consists of the following:
For the year ended December 31, |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Income before income taxes - Domestic |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Income before income taxes - Foreign |
|
|
|
|
|
|
|
|
|
|||
Net income before income taxes |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|||
Income tax expense - Domestic |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Income tax expense - Foreign |
|
|
|
|
|
|
|
|
|
|||
Total income tax expense |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
61
Table of Contents
The following table reconciles the U.S. federal statutory income tax rate to the Company’s effective income tax rate:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||||||||||||||
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
|
Amount |
|
|
Percent |
|
||||||
Statutory U.S. federal income tax |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
State and local income taxes, net of |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Internal revenue code section 162 |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Other |
|
|
|
|
|
% |
|
|
( |
) |
|
|
( |
)% |
|
|
( |
) |
|
|
( |
)% |
||
Unconsolidated effective income tax |
|
|
|
|
|
% |
|
|
|
|
|
% |
|
|
|
|
|
% |
||||||
Impact attributable to redeemable |
|
|
( |
) |
|
|
( |
%) |
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
)% |
||
Effective income tax rate |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
|
$ |
|
|
|
% |
||||||
Income taxes paid (net of refunds) were as follows:
For the year ended December 31, |
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Federal |
|
$ |
|
|
$ |
|
|
$ |
|
|||
State - New York |
|
|
|
|
|
|
|
|
|
|||
State - Other |
|
|
|
|
|
|
|
|
|
|||
Local - Columbus, OH |
|
|
|
|
|
|
|
|
|
|||
Local - Other |
|
|
|
|
|
|
|
|
|
|||
Total Income taxes paid |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Income taxes paid are disaggregated by jurisdiction when such jurisdiction represents five percent or more of total income taxes paid in any period presented. Columbus, Ohio represented five percent or more of total income taxes paid in each of the years ended December 31, 2025, 2024, and 2023. New York represented five percent or more of total income taxes paid in the years ended December 31, 2024 and 2023. Although New York did not meet the five percent threshold in 2025, it is presented separately for consistency and comparability, as income taxes paid in that jurisdiction were close to the quantitative threshold.
Deferred income taxes and benefits arise from temporary differences between taxable income for financial statement and income tax return purposes. Net deferred tax assets consisted of the following as of December 31, 2025 and 2024:
|
|
Year Ended |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Stock-based compensation |
|
$ |
|
|
$ |
|
||
Accrued compensation |
|
|
|
|
|
|
||
Unrealized gains |
|
|
( |
) |
|
|
( |
) |
Property and equipment |
|
|
( |
) |
|
|
( |
) |
Other assets and liabilities |
|
|
|
|
|
|
||
Net deferred tax assets |
|
$ |
|
|
$ |
|
||
The net temporary differences incurred to date will reverse in future periods as the Company generates taxable earnings. The Company believes it is more likely than not that the results of future operations will generate sufficient taxable income to realize the net deferred tax assets recorded. The Company records a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2025,
FASB ASC 740, Income Taxes, prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on derecognition,
62
Table of Contents
classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company recognizes tax benefits related to positions taken, or expected to be taken, on its tax returns, only if the positions are “more-likely-than-not” sustainable. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company did not record an accrual for tax-related uncertainties or unrecognized tax positions as of December 31, 2025 and 2024, respectively. The Company does not expect a change to the reserve for uncertain tax positions within the next twelve months that would have a material impact on the consolidated financial statements.
The Company and its subsidiaries file income tax returns with the Internal Revenue Service and the taxing authorities of various states. Generally, the Company is subject to federal, state, and local examinations by tax authorities for the tax years ended December 31, 2021 through 2025.
Note 10 Earnings Per Share
DHIL common shares outstanding consist of all shares issued and outstanding, including unvested restricted shares. Basic and diluted EPS are calculated under the two-class method. Unvested restricted shares are considered participating securities due to nonforfeitable dividend rights.
|
|
|
Year Ended December 31, |
|
|||||||||
|
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Net income |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Less: Net income attributable to redeemable noncontrolling |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Net income attributable to common shareholders |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Weighted average number of outstanding shares - Basic |
|
|
|
|
|
|
|
|
|
|
|||
Weighted average number of outstanding shares - Diluted |
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||
Earnings per share attributable to common shareholders |
|
|
|
|
|
|
|
|
|
|
|||
Basic |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Diluted |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
Note 11 Commitments and Contingencies
The Company indemnifies its directors, officers, and certain employees for certain liabilities that may arise from the performance of their duties to the Company. From time to time, the Company and its subsidiaries may be involved in legal matters incidental to its business. There are currently no such legal matters pending that the Company believes will have a material adverse effect on its consolidated financial statements. However, litigation involves an element of uncertainty, and future developments could cause legal actions or claims to have a material adverse effect on the Company’s financial condition, results of operations, and liquidity.
Additionally, in the normal course of business, the Company enters into agreements that contain a variety of representations and warranties and that provide indemnification obligations. Certain agreements do not contain any limits on the Company’s liability and could involve future claims that may be made against the Company that have not yet occurred. Therefore, it is not possible to estimate the Company’s potential liability under these indemnities. Further, the Company maintains insurance policies that may provide full or partial coverage against certain of these liabilities.
Note 12 Merger with First Eagle
On December 10, 2025, DHIL entered into the Merger Agreement with First Eagle and Merger Sub, pursuant to which, upon the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into DHIL, whereupon the separate existence of Merger Sub will cease, and DHIL will be the surviving corporation as a wholly-owned subsidiary of First Eagle.
Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding DHIL common share, without par value (including each DHIL restricted share but excluding any DHIL common shares that are held by First Eagle, Merger Sub, or any
63
Table of Contents
other subsidiary of First Eagle or DHIL or any DHIL common shares as to which appraisal rights have been properly exercised in accordance with Ohio law), will be automatically converted into the right to receive $
From the date of execution of the Merger Agreement until the consummation of the Merger, DHIL is subject to customary restrictions on its activities, including limitations on certain capital expenditures, investments, indebtedness, and other specified actions, in each case as set forth in the Merger Agreement.
The obligations of the parties to consummate the Merger are subject to the satisfaction or, to the extent permitted, waiver of certain customary closing conditions, including, among others, the adoption of the Merger Agreement by the affirmative vote of a majority of the outstanding DHIL common shares entitled to vote at the DHIL shareholders meeting, the expiration or termination of the waiting period applicable to the consummation of the Merger under the HSR Act, and the absence of any order issued by any court of competent jurisdiction or other governmental authority or applicable law prohibiting, rendering illegal or permanently enjoining the consummation of the Merger. The obligations of First Eagle and Merger Sub to consummate the Merger are also subject to the Company obtaining the consent of the Company’s clients generating an aggregate revenue run-rate of at least
Under certain circumstances specified in the Merger Agreement, DHIL may be required to pay First Eagle a termination fee of $
The Merger is not subject to a financing condition. First Eagle currently intends to fund the cash consideration with a combination of cash on hand and by drawing on all or a portion of one or more credit facilities. Although there can be no assurance that the Merger will be completed, the Company currently expects the transaction to be completed in the second quarter of 2026, subject to the satisfaction or waiver of the closing conditions set forth in the Merger Agreement.
64
Table of Contents
ITEM 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
None.
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Management, including the CEO and the Chief Financial Officer (the "CFO"), has conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act) as of the end of the period covered by this Form 10-K (the “Evaluation Date”). Based on such evaluation, the CEO and CFO have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the CEO and CFO, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Annual Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the U.S.
Under the supervision and with the participation of the CEO and CFO, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external reporting purposes in accordance with GAAP. The Audit Committee of the Board reviewed the results of management’s assessment.
The Company’s independent registered public accounting firm, KPMG LLP, has audited the Company’s 2025 and 2024 consolidated financial statements included in this Form 10-K and the Company’s internal control over financial reporting as of December 31, 2025, and has issued its Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements and the Company’s internal control over financial reporting, which is included in this Form 10-K.
Inherent Limitations on Effectiveness of Controls
There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making may be faulty and breakdowns may occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, management, including the CEO and CFO, does not expect that the control system can prevent or detect all errors or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
65
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Directors
Diamond Hill Investment Group, Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Diamond Hill Investment Group, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, shareholders’ equity and redeemable noncontrolling interest, and cash flows for each of the years in the three-year period ended December 31, 2025, and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 2026 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Table of Contents
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Columbus, Ohio
February 26, 2026
ITEM 9B. Other Information
During the quarter ended December 31, 2025,
ITEM 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
67
Table of Contents
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
Information required by this Item 10 is incorporated herein by reference from the Company’s definitive proxy statement for its 2026 annual meeting of shareholders, which will be filed with the SEC no later than 120 days after December 31, 2025, pursuant to Regulation 14A of the Exchange Act (the “2026 Proxy Statement”), under the captions: “Delinquent Section 16(a) Reports”, “Proposal 1 - Election of Directors”, “The Board of Directors and Committees”, “Corporate Governance”, and “Executive Compensation”.
ITEM 11. Executive Compensationn
Information required by this Item 11 is incorporated herein by reference from the 2026 Proxy Statement under the captions: “The Board of Directors and Committees”, “Corporate Governance”, and “Executive Compensation” (excluding the information under the subheadings “Pay Versus Performance Table,” “Tabular List of Important Financial Performance Measures” and “Analysis of Information Presented in the Pay Versus Performance Table”); provided, however, that the pay versus performance disclosure included in the 2026 Proxy Statement in response to Item 402(v) of Regulation S-K shall not be incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
The following table sets forth certain information concerning the Company's equity compensation plans at December 31, 2025:
Equity Compensation Plan Information
|
|
(a) |
|
(b) |
|
(c) |
|
|
|
|
|
|
|
|
Number of securities |
|
|
|
|
|
|
|
|
remaining available for |
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|
|
|
Number of securities to |
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|
|
future issuance under |
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|
|
|
be issued upon the |
|
Weighted-average |
|
equity compensation |
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|
|
|
exercise of outstanding |
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exercise price of |
|
plans (excluding |
|
|
|
|
options, warrants and |
|
outstanding options, |
|
securities reflected in |
|
|
Plan category |
|
rights |
|
warrants and rights |
|
column (a)) |
|
|
Equity compensation plans approved by security holders |
|
— |
|
— |
|
|
162,151 |
|
The other information required by this Item 12 is incorporated herein by reference from the 2026 Proxy Statement under the captions: “Security Ownership of Certain Beneficial Owners and Management” and “ Executive Compensation.”
ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Information required by this Item 13 is incorporated herein by reference from the 2026 Proxy Statement under the caption: “Proposal 1 – Election of Directors – Director Independence” and “Corporate Governance”.
ITEM 14. Principal Accountant Fees and Services
Information required by this Item 14 is incorporated herein by reference from the 2026 Proxy Statement under the caption: “Proposal 2 – Ratification of the Appointment of Independent Registered Public Accounting Firm”.
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Table of Contents
PART IV
ITEM 15. Exhibit and Financial Statement Schedules
(a) (1) Financial Statements: See “Index to the Consolidated Financial Statements” within Part II. Item 8, Financial Statements and Supplementary Data.
(2) Financial Statement Schedules: All financial statement schedules for which provision is made in the applicable accounting regulations of the SEC are omitted because they are not required or the required information is included in the accompanying financial statements or notes thereto.
(3) Exhibits:
2.1
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Agreement and Plan of Merger, dated December 10, 2025, by and among Diamond Hill Investment Group, Inc., First Eagle Investment Management, LLC, and Soar Christopher Holdings, Inc. (incorporated by reference from Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on December 11, 2025). |
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3.1
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Amended and Restated Articles of Incorporation of DHIL (incorporated by reference from Exhibit 3.1 to the Annual Report on Form 10-K filed with the SEC on February 29, 2024). |
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3.2 |
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Amended and Restated Code of Regulations of DHIL (incorporated by reference from Exhibit 3.2 to the Current Report on Form 8-K filed with the SEC on April 28, 2017). |
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4.1 |
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Description of DHIL Capital Stock (incorporated by reference from Exhibit 4.1 to the Annual Report on Form 10-K filed on February 27, 2020). |
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10.1 |
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Amended Exhibit A, to the Amended and Restated Investment Management Agreement dated November 17, 2011, as amended August 21, 2025, between Diamond Hill Capital Management, Inc. and the Diamond Hill Funds, (incorporated by reference from Exhibit 99.(D)(III) to Form N-1A filed by Diamond Hill Funds as a 485BPOS on September 19, 2025). |
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10.2 |
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Amended and Restated Administrative, Fund Accounting and Transfer Agency Services Agreement dated May 31, 2002, as amended August 22, 2024, between Diamond Hill Capital Management, Inc. and the Diamond Hill Funds (incorporated by reference from Exhibit 99(H)(V) to Form N-1A filed by Diamond Hill Funds as a 485BPOS on September 27, 2024). |
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10.3* |
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Diamond Hill Investment Group, Inc. 2014 Equity and Cash Incentive Plan. (incorporated by reference from Exhibit 10.1 to the Registration Statement on Form S-8 filed with the SEC on June 27, 2014). |
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10.4* |
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Diamond Hill Investment Group, Inc. 2014 Equity and Cash Incentive Plan Form of Restricted Stock Award Agreement - Employee New Hire (incorporated by reference from Exhibit 10.4 to the Annual Report on Form 10-K filed with the SEC on February 21, 2019). |
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10.5* |
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Diamond Hill Investment Group, Inc. 2014 Equity and Cash Incentive Plan Form of Restricted Stock Award Agreement - Employee Long-Term Incentive (incorporated by reference from Exhibit 10.14 to the Annual Report on Form 10-K filed with the SEC on February 25, 2022). |
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10.6* |
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Diamond Hill Investment Group, Inc. 2014 Equity and Cash Incentive Plan Form of Restricted Stock Award Agreement - Director (incorporated by reference from Exhibit 10.15 to the Annual Report on Form 10-K filed with the SEC on February 25, 2022). |
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10.7* |
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Diamond Hill Investment Group, Inc. 2022 Equity and Cash Incentive Plan (incorporated by reference from Exhibit 99.1 to the Registration Statement on Form S-8 filed with the SEC on June 14, 2022). |
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10.8* |
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2022 Equity and Cash Incentive Plan Form of Restricted Stock Award Agreement - Employee New Hire (incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on July 28, 2022). |
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10.9* |
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2022 Equity and Cash Incentive Plan Form of Restricted Stock Award Agreement - Employee Long-Term Incentive (incorporated by reference from Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on July 28, 2022). |
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10.10* |
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2022 Equity and Cash Incentive Plan Form of Restricted Stock Award Agreement - Director (incorporated by reference from Exhibit 10.3 to the Quarterly Report on Form 10-Q filed with the SEC on July 28, 2022). |
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10.11* |
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Diamond Hill Investment Group, Inc. 2025 Equity and Cash Incentive Plan (incorporated by reference from Exhibit 99.1 to the Registration Statement on Form S-8 filed with the SEC on April 29, 2025). |
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Table of Contents
10.12* |
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Diamond Hill Investment Group, Inc. 2025 Equity and Cash Incentive Plan Form of Restricted Stock Award - Employee Cliff Vest (Incorporated by reference from Exhibit 10.2 to the Quarterly Report on Form 10-Q filed with the SEC on April 29, 2025). |
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10.13* |
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Diamond Hill Investment Group, Inc. 2025 Equity and Cash Incentive Plan Form of Restricted Stock Award - Employee Long-Term Incentive (Incorporated by reference from Exhibit 10.3 to the Quarterly Report on Form 10-Q filed with the SEC on April 29, 2025). |
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10.14* |
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Diamond Hill Investment Group, Inc. 2025 Equity and Cash Incentive Plan Form of Restricted Stock Award - Director (Incorporated by reference from Exhibit 10.4 to the Quarterly Report on Form 10-Q filed with the SEC on April 29, 2025). |
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10.15* |
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Diamond Hill Fixed Term Deferred Compensation Plan (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on April 30, 2013). |
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10.16* |
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Diamond Hill Variable Term Deferred Compensation Plan (incorporated by reference from Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on April 30, 2013). |
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10.17* |
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First Amendment to the Diamond Hill Fixed Term Deferred Compensation Plan (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 28, 2013). |
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10.18* |
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First Amendment to the Diamond Hill Variable Term Deferred Compensation Plan (incorporated by reference from Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on May 28, 2013). |
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10.19* |
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Second Amendment to the Diamond Hill Variable Term Deferred Compensation Plan (incorporated by reference from Exhibit 10.15 to the Annual Report on Form 10-K filed with the SEC on February 29, 2024).. |
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10.20* |
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Third Amendment to the Diamond Hill Variable Term Deferred Compensation Plan (incorporated by reference from Exhibit 10.16 to the Annual Report on Form 10-K filed with the SEC on February 29, 2024). |
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10.21* |
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Employment Agreement between Heather E. Brilliant and Diamond Hill Capital Management, Inc., dated October 26, 2021 (incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the SEC on October 26, 2021). |
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10.22* |
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Amendment to Employment Agreement for Heather E. Brilliant, dated March 31, 2023 (incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q, filed with the SEC on May 10, 2023). |
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10.23* |
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Amendment No. 2 to Employment Agreement between Heather E. Brilliant and Diamond Hill Capital Management, Inc. dated November 14, 2023 (incorporated by reference from Exhibit 10.19 to the Annual Report on Form 10-K filed with the SEC on February 29, 2024). |
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10.24* |
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Amended and Restated Executive Employment Agreement for Heather E. Brilliant, dated June 12, 2025 (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on June 13, 2025). |
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10.25* |
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Employment Agreement between Jo Ann Quinif and Diamond Hill Capital Management, Inc., dated September 19, 2025 (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on September 19, 2025). |
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10.26* |
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Diamond Hill Investment Group, Inc. Employee Stock Purchase Plan (incorporated by reference from Exhibit 10.3 to the Quarterly Report on Form 10-Q filed with the SEC on October 27, 2020). |
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10.27* |
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Asset Purchase Agreement By and Between Brandywine Global Investment Management, LLC and Diamond Hill Capital Management, Inc., dated February 2, 2021 (incorporated by reference from Exhibit 10.1 to the Quarterly Report on Form 10-Q filed with the SEC on April 26, 2021). |
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10.28* |
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Diamond Hill Investment Group, Inc. - Form of Diamond Hill Investment Group, Inc. Executive Officer and Director Indemnification Agreement (incorporated by reference from Exhibit 10.22 to the Annual Report on Form 10-K filed with the SEC on February 29, 2024). |
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10.29 |
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Investment Management Agreement between Diamond Hill Capital Management, Inc. and the Diamond Hill Securitized Credit Fund dated August 21, 2024 (incorporated by reference from Exhibit 99.(2)(G) to Form N-2A filed by Diamond Hill Securitized Credit Fund on August 30, 2024). |
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10.30 |
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Administrative and Transfer Agency Services Agreement between Diamond Hill Capital Management, Inc. and the Diamond Hill Securitized Credit Fund dated August 21, 2024 (incorporated by reference from Exhibit 99.(2)(K)(1) to Form N-2A filed by Diamond Hill Securitized Credit Fund on August 30, 2024). |
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10.31* |
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Diamond Hill Investment Group, Inc. 2025 Equity and Cash Incentive Plan Form of Deferred Cash Award. |
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Table of Contents
10.32* |
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Retention Bonus Award Agreement, dated January 28, 2026, by and between Diamond Hill Capital Management, Inc. and Thomas E. Line (incorporated by reference from Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on January 28, 2026). |
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10.33 |
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Administrative Services Agreement, dated August 21, 2025 with Diamond Hill Capital Management, Inc. and the Diamond Hill Funds on behalf of the Diamond Hill Large Cap Concentrated ETF, (incorporated by reference from Exhibit 99.(H)(V) for Form N-1A filed by Diamond Hill Funds as a 485BPOS on September 19, 2025). |
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10.34*
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Executive Severance/Non-Solicitation Letter Agreement, dated December 10, 2025, by and between First Eagle Investment Management, LLC and Heather Brilliant, (incorporated by reference from Exhibit 99.1 to Current Report on Form 8-K filed with the SEC on December 11, 2025). |
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10.35*
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Executive Severance/Non-Solicitation Letter Agreement, dated December 10, 2025, by and between First Eagle Investment Management, LLC and Jo Ann Quinif, (incorporated by reference from Exhibit 99.2 to Current Report on Form 8-K filed with the SEC on December 11, 2025). |
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14.1 |
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Diamond Hill Investment Group, Inc. Code of Business Conduct and Ethics dated October 29, 2025. |
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19.1 |
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Diamond Hill Investment Group, Inc. |
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21.1 |
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Subsidiaries. |
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23.1 |
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Consent of Independent Registered Public Accounting Firm, KPMG LLP. |
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31.1 |
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Certification of Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a). |
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31.2 |
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Certification of Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a). |
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32.1 |
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Section 1350 Certifications. |
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97.1 |
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Diamond Hill Investment Group, Inc. Executive Officer Compensation Recoupment and Restitution Policy (incorporated by reference from Exhibit 97 to the Annual Report on Form 10-K filed with the SEC on February 29, 2024). |
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101.INS |
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XBRL Instance Document. |
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101.SCH |
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XBRL Taxonomy Extension Schema Document. |
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104 |
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Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101). |
* Denotes management contract or compensatory plan or arrangement.
† Annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits upon request by the SEC.
ITEM 16. Form 10-K Summary
None.
71
Table of Contents
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
DIAMOND HILL INVESTMENT GROUP, INC. |
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By: |
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/s/ Heather E. Brilliant |
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Heather E. Brilliant, Chief Executive Officer and President |
February 26, 2026 |
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature |
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Title |
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Date |
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/s/ Heather E. Brilliant |
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Chief Executive Officer and |
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February 26, 2026 |
Heather E. Brilliant |
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President (Principal Executive Officer) |
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/s/ Thomas E. Line |
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Chief Financial Officer and |
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February 26, 2026 |
Thomas E. Line |
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Treasurer (Principal Financial Officer and Principal Accounting Officer) |
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Richard S. Cooley* |
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Director |
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February 26, 2026 |
Richard S. Cooley |
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Gordon B. Fowler* |
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Director |
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February 26, 2026 |
Gordon B. Fowler |
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Austin Hawley* |
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Director |
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February 26, 2026 |
Austin Hawley |
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Paula R. Meyer* |
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Director |
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February 26, 2026 |
Paula R. Meyer |
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Diane C. Nordin* |
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Director |
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February 26, 2026 |
Diane C. Nordin |
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Nicole R. St. Pierre* |
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Director |
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February 26, 2026 |
Nicole R. St. Pierre |
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L’Quentus Thomas* |
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Director |
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February 26, 2026 |
L’Quentus Thomas |
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* By |
/s/ Thomas E. Line |
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Thomas E. Line |
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Executed by Thomas E. Line |
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on behalf of those indicated pursuant to Powers of Attorney |
72
FAQ
What is Diamond Hill Investment Group (DHIL) receiving in the merger with First Eagle?
What conditions must be satisfied before the DHIL–First Eagle merger can close?
How large are Diamond Hill’s assets under management and advisement in the 2025 10-K?
What were Diamond Hill’s 2025 net flows and market impact on assets?
How dependent is Diamond Hill on its Proprietary Funds for revenue?
Will DHIL continue share repurchases or dividends before the merger closes?
What cybersecurity framework does Diamond Hill use according to the 2025 filing?
