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Diamond Hill Capital, a First Eagle Investment Management company, issued its Q2 2026 investor letter for its "Small Cap Strategy". The letter can be downloaded here. The strategy returned 24.01% in the second quarter, outperforming the Russell 2000 Index's 21.49% return. Performance was positively affected by stock selection in health care and industrials, while the Fund's underweight position in information technology was the largest relative detractor as AI-related companies drove market gains. Small-cap equities benefited from strong earnings, resilient economic conditions, and easing geopolitical concerns, with technology leading sector performance while energy declined alongside lower oil prices. Despite the market's focus on AI, the Fund's strongest contributors came from businesses outside the theme, particularly in health care, defense-oriented companies, and tangible-asset industries. Looking ahead, the Fund remains focused on resilient, underfollowed companies tied to infrastructure, defense modernization, and essential industries where disciplined capital allocation and long-term demand can support value creation. Also, check the fund's top five holdings to see its best picks in 2026.

In its second-quarter 2026 investor letter, Diamond Hill Capital Small Cap Strategy highlighted Astrana Health, Inc. (NASDAQ:ASTH). Astrana Health, Inc. (NASDAQ:ASTH), a US-based healthcare management company that provides medical care services, contributed positively to the Strategy's performance this quarter. On September 2, 2026, Astrana Health, Inc. (NASDAQ:ASTH) closed at $38.57 per share. Astrana Health, Inc. (NASDAQ:ASTH) was up 11.75% over the past month, and its shares gained 23.75% over the past 52 weeks. Astrana Health, Inc. (NASDAQ:ASTH) has a market capitalization of $1.91 billion.

Diamond Hill Capital Small Cap Strategy stated the following regarding Astrana Health, Inc. (NASDAQ:ASTH) in its Q2 2026 investor letter:

"Astrana Health, Inc. (NASDAQ:ASTH), a leader in value-based health care, outperformed as the company results have continued to demonstrate that it was not taking advantage of loopholes within Medicare coding, the balance sheet is back in good shape after the recent Prospect Health acquisition, which is performing well, and recent Medicare Advantage rates came in better than expected."

Astrana Health, Inc. (NASDAQ:ASTH) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 18 hedge fund portfolios held Astrana Health, Inc. (NASDAQ:ASTH) at the end of the second quarter which was 15 in the previous quarter. While we acknowledge the potential of Astrana Health, Inc. (NASDAQ:ASTH) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Astrana Health, Inc. (NASDAQ:ASTH) and shared a list of best small cap stocks to buy for long term. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.