Diamond Hill Sees Insteel (IIIN) as a Hidden Winner From Infrastructure and Data Center Growth

Diamond Hill Sees Insteel (IIIN) as a Hidden Winner From Infrastructure and Data Center Growth

Fri, September 4, 2026 at 4:44 PM GMT+3 3 min read

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 Insteel Industries Inc. (NYSE:IIIN). During the quarter, the strategy initiated a position in Insteel Industries Inc. (NYSE:IIIN), a leading manufacturer of steel wire reinforcing products for concrete construction applications. On September 03, 2026, Insteel Industries Inc. (NYSE:IIIN) closed at $31.05 per share. Insteel Industries Inc. (NYSE:IIIN) fell 3.84% in the past month, and its shares lost 20.14% over the past 52 weeks. Insteel Industries Inc. (NYSE:IIIN) has a market capitalization of $587.33 billion.

Diamond Hill Capital Small Cap Strategy stated the following regarding Insteel Industries Inc. (NYSE:IIIN) in its Q2 2026 investor letter:

"We initiated a position in Insteel Industries Inc. (NYSE:IIIN), the nation's largest manufacturer of steel wire reinforcing products for concrete construction. We believe the company is well positioned to benefit from durable infrastructure and data center spending, as well as the ongoing adoption of labor-saving reinforcing solutions. Recent acquisitions have strengthened Insteel's competitive position and geographic footprint, while its debt-free balance sheet provides flexibility to pursue additional growth opportunities and return capital to shareholders."

Insteel Industries Inc. (NYSE:IIIN) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held Insteel Industries Inc. (NYSE:IIIN) at the end of the second quarter which was 22 in the previous quarter. While we acknowledge the potential of Insteel Industries Inc. (NYSE:IIIN) 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 Insteel Industries Inc. (NYSE:IIIN) and shared the company's plans to close a plant and its approach to manage operations. 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.