Diamond Hill Capital (Trades, Portfolio) disclosed last week that its six biggest buys for the second quarter were: Booking Holdings Inc. (NASDAQ:BKNG), O'Reilly Automotive Inc. (NASDAQ:ORLY), Chevron Corp. (NYSE:CVX) and Ashland Global Holdings Inc. (NYSE:ASH). The fund also closed its position in top Warren Buffett (Trades, Portfolio)'s Berkshire Hathaway Inc. (NYSE:BRK.A)(NYSE:BRK.B) holding Apple Inc. (NASDAQ:AAPL).
The fund invests predominantly through a bottom-up process that begins with fundamental analysis of a company's profitability and market position, financial and competitive position, management quality, valuation and growth prospects. Diamond Hill also estimates the intrinsic value for each potential holding and compares the share price to the estimated fair value.
As of quarter-end, the $18.70-billion equity portfolio contains 166 stocks, of which 13 represent new holdings. The fund's largest sectors in terms of weight are financial services, which represents 28.33% of the equity portfolio, and consumer cyclical, which represents 16.13% of the equity portfolio.
The fund purchased 128,244 shares of Booking Holdings, giving the position 1.29% weight in the equity portfolio. Shares averaged $1,795.29 during the quarter.
The Norwalk, Connecticut-based company offers booking services for hotels, airline tickets, rental cars, restaurant reservations, cruises and other vacation packages. GuruFocus ranks the company's profitability 9 out of 10 on several positive indicators, which include a strong Piotroski F-score of 7 and operating margins that are outperforming 92.92% of global competitors. Additionally, Booking's business predictability ranks 3.5 stars out of five on consistent revenue and earnings growth over the past 10 years.
The fund purchased 380,010 shares of O'Reilly, giving the position 0.75% equity portfolio space. Shares averaged $380.06 during the quarter.
The Springfield, Missouri-based company retails aftermarket automotive parts, tools and accessories. GuruFocus ranks the company's profitability 9 out of 10 on several positive indicators, which include profit margins that have increased approximately 2.90% per year on average over the past five years and are outperforming 92.73% of global competitors. Additionally, the company's business predictability ranks five stars on strong and consistent revenue and earnings growth over the past 10 years.
The fund purchased 1,073,256 shares of Chevron, giving the position 0.71% equity portfolio weight. Shares averaged $120.87 during the quarter.
The Sam Ramon, California-based company explores, refines and produces oil around the U.S. GuruFocus ranks the company's profitability 5 out of 10: Although the company has a Piotroski F-score of a perfect 9, Chevron's three-year revenue growth rate of 6.90% underperforms 64.15% of global competitors while its operating margin of 9.37% underperforms 51.72% of global competitors.
The fund purchased 1,377,554 shares of Ashland, giving the position 0.59% equity portfolio space. Shares averaged $77.23 during the quarter.
GuruFocus ranks the Covington, Kentucky-based company's profitability 5 out of 10: Although the company has a strong Piotroski F-score of 7, Ashland's margins and returns are underperforming over 74% of global competitors.
The fund's one exit transaction was Apple: Diamond Hill sold its 833,142 shares of the Cupertino, California-based giant, reducing its equity portfolio 0.87%.
Disclosure: Long O'Reilly.
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This article first appeared on GuruFocus.
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