United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 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 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) | --- | --- | |----------------- ...

[Part I: Financial Information](index=3&type=section&id=Part%20I:%20FINANCIAL%20INFORMATION) This section provides the company's unaudited consolidated financial statements and management's discussion for the first quarter of 2021 [Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements for Q1 2021, including balance sheets, income statements, cash flows, and detailed notes [Financial Statements Overview](index=4&type=section&id=Financial%20Statements%20Overview) Q1 2021 saw net income of **$13.7 million**, total assets of **$259.7 million**, and **$(15.7) million** net cash used in operations Consolidated Balance Sheet Summary (Unaudited, in USD) | Account | March 31, 2021 (USD) | December 31, 2020 (USD) | | :--- | :--- | :--- | | **Total Assets** | **$259,665,393** | **$263,097,341** | | Total Liabilities | $54,559,169 | $69,644,255 | | Total Shareholders' Equity | $194,441,078 | $184,080,753 | | **Total Liabilities and Shareholders' Equity** | **$259,665,393** | **$263,097,341** | Consolidated Statement of Income Summary (Unaudited, in thousands USD) | Metric | Three Months Ended March 31, 2021 (in thousands USD) | Three Months Ended March 31, 2020 (in thousands USD) | | :--- | :--- | :--- | | Total Revenue | $39,014 | $31,926 | | Net Operating Income | $13,532 | $20,465 | | Investment Income (Loss), Net | $5,663 | $(22,398) | | **Net Income Attributable to Common Shareholders** | **$13,709** | **$1,530** | | **Diluted EPS** | **$4.34** | **$0.47** | Consolidated Statement of Cash Flows Summary (Unaudited, in USD) | Cash Flow Activity | Three Months Ended March 31, 2021 (USD) | Three Months Ended March 31, 2020 (USD) | | :--- | :--- | :--- | | Net Cash (Used in) Provided by Operating Activities | $(15,660,505) | $1,990,996 | | Net Cash Provided by Investing Activities | $1,587,873 | $12,145,851 | | Net Cash Used in Financing Activities | $(4,217,885) | $(10,001,543) | | **Net Change in Cash and Cash Equivalents** | **$(18,290,517)** | **$4,135,304** | [Note 2: Significant Accounting Policies](index=8&type=section&id=Note%202%20Significant%20Accounting%20Policies) This note details the company's accounting policies, including U.S. GAAP basis, consolidation principles, and revenue recognition from advisory fees - The company consolidates funds where its ownership represents a majority interest (greater than **50%**), including the Diamond Hill Large Cap Concentrated, International, and Global Funds as of March 31, 2021[28](index=28&type=chunk) Revenue by Source (Three Months Ended March 31, in USD) | Revenue Source | 2021 (USD) | 2020 (USD) | | :--- | :--- | :--- | | **Investment Advisory** | | | | Proprietary funds | $26,510,701 | $23,454,563 | | Sub-advised funds and separately managed accounts | $10,058,402 | $6,703,117 | | **Mutual fund administration, net** | $2,445,330 | $1,768,065 | | **Total Revenue** | **$39,014,433** | **$31,925,745** | - As of March 31, 2021, the company had **$443.4 million** in AUM subject to performance-based fees, with unearned potential fees of **$10.1 million** based on investment results to date, with no performance-based fees recorded in Q1 2021 or Q1 2020[44](index=44&type=chunk) [Note 3: Investments](index=13&type=section&id=Note%203%20Investments) Investments increased to **$142.7 million** by March 31, 2021, with Q1 2021 net investment income of **$5.7 million**, a recovery from prior year losses Carrying Value of Investments (in USD) | Investment Type | March 31, 2021 (USD) | December 31, 2020 (USD) | | :--- | :--- | :--- | | Securities held in Consolidated Funds | $47,164,927 | $33,233,307 | | Company sponsored investments | $95,530,265 | $95,167,829 | | **Total Investments** | **$142,695,192** | **$128,401,136** | Components of Net Investment Income (Loss) (in USD) | Component | Three Months Ended March 31, 2021 (USD) | Three Months Ended March 31, 2020 (USD) | | :--- | :--- | :--- | | Realized gains (losses) | $2,523,505 | $(817,539) | | Unrealized gains (losses) | $2,505,344 | $(22,467,598) | | Dividends | $665,009 | $894,413 | | **Investment income (loss), net** | **$5,663,454** | **$(22,398,092)** | [Note 11: Sale of Assets of Diamond Hill's High Yield-Focused Funds](index=18&type=section&id=Note%2011%20Sale%20of%20Assets%20of%20Diamond%20Hill's%20High%20Yield-Focused%20Funds) The company agreed to sell its high yield-focused funds for up to **$9.0 million** initial payment and **$13.0 million** in potential future payments - DHCM entered into an asset purchase agreement with Brandywine Global to sell its two high yield-focused mutual funds[87](index=87&type=chunk) - The deal consideration includes an initial payment of up to **$9.0 million** at closing and two potential additional payments totaling up to **$13.0 million** based on net revenue one year after closing[89](index=89&type=chunk) - The sale is subject to customary closing conditions, including shareholder approval of the acquired funds, and is expected to close on July 30, 2021[90](index=90&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2021 performance, highlighting **75% AUM growth**, **22% revenue increase**, and changes in liquidity and capital resources [Assets Under Management (AUM)](index=20&type=section&id=Assets%20Under%20Management) Total AUM grew **75%** to **$30.6 billion** by March 31, 2021, driven by market appreciation and **$1.7 billion** net inflows AUM by Product (in millions) | Product | March 31, 2021 (in millions) | March 31, 2020 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Proprietary funds | $20,954 | $11,942 | 75% | | Sub-advised funds | $3,575 | $1,928 | 85% | | Separately managed accounts | $6,053 | $3,626 | 67% | | **Total AUM** | **$30,582** | **$17,496** | **75%** | AUM Roll-Forward for Q1 2021 (in millions) | Description | Amount (in millions) | | :--- | :--- | | AUM at beginning of period | $26,411 | | Net cash inflows | $1,744 | | Net market appreciation and income | $2,427 | | **AUM at end of period** | **$30,582** | - Effective March 31, 2021, the Company closed its Large Cap strategy to most new investors due to strong inflows[104](index=104&type=chunk) [Consolidated Results of Operations](index=23&type=section&id=Consolidated%20Results%20of%20Operations) Q1 2021 revenue increased **22%** to **$39.0 million**, with net income surging **796%** to **$13.7 million**, despite a **34%** decline in reported net operating income Q1 2021 vs. Q1 2020 Performance Summary (in thousands) | Metric | Q1 2021 (in thousands) | Q1 2020 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $39,014 | $31,926 | 22% | | Net operating income | $13,532 | $20,465 | (34)% | | Net operating income, as adjusted (Non-GAAP) | $16,635 | $12,309 | 35% | | Net income attributable to common shareholders | $13,709 | $1,530 | 796% | | Diluted EPS | $4.34 | $0.47 | 823% | - The **22%** increase in revenue was primarily due to a **35%** increase in average AUM, partially offset by a decrease in the average advisory fee rate from **0.58%** to **0.53%** due to a shift in asset mix to lower-fee strategies[109](index=109&type=chunk)[115](index=115&type=chunk) - Deferred compensation expense was **$3.1 million** in Q1 2021 compared to a benefit of **$(8.2) million** in Q1 2020, significantly impacting reported operating income due to market performance of plan investments[118](index=118&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, repurchased **$1.9 million** in shares, and initiated a **$1.00** per share quarterly dividend in Q1 2021 - The company's main source of liquidity is cash flow from operating activities, believed sufficient to meet operating needs for the next 12 months[124](index=124&type=chunk) - Under its **$50.0 million** share repurchase program, the company repurchased **$1.9 million** of common shares during Q1 2021, with **$33.5 million** remaining available[128](index=128&type=chunk) - The Board of Directors instituted a regular quarterly dividend of **$1.00** per share, with the first payment made in March 2021 and a second approved in April 2021[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No significant changes in market risk exposures have occurred since the December 31, 2020, Annual Report on Form 10-K - There have been no significant changes in the Company's market risk exposures since its December 31, 2020 year-end report[158](index=158&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures are effective, with no material changes to internal controls during Q1 2021 - Management concluded that as of the end of the period, the Company's disclosure controls and procedures are effective[159](index=159&type=chunk) - There were no changes in internal control over financial reporting during Q1 2021 that have materially affected, or are likely to materially affect, the company's internal controls[160](index=160&type=chunk) [Part II: Other Information](index=31&type=section&id=Part%20II:%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity security sales, and exhibits for the reporting period [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal matters expected to materially impact its consolidated financial statements - There are currently no pending legal matters that the Company believes could have a material adverse effect on its consolidated financial statements[161](index=161&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since its 2020 Annual Report on Form 10-K - There have been no material changes to the Company's risk factors from the information disclosed in its 2020 Annual Report on Form 10-K[162](index=162&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **12,529** shares for approximately **$1.9 million** under its publicly announced program during Q1 2021 Share Repurchases in Q1 2021 (in USD) | Period | Total Shares Purchased (Publicly Announced Program) | Average Price Paid Per Share (USD) | Total Cost (Publicly Announced Program, USD) | | :--- | :--- | :--- | :--- | | Jan 2021 | 0 | N/A | $0 | | Feb 2021 | 0 | N/A | $0 | | Mar 2021 | 12,529 | $151.10 | $1,893,146 | | **Total Q1** | **12,529** | **$151.10** | **$1,893,146** | - Through March 31, 2021, the Company has repurchased a total of **141,918** shares under the 2020 Repurchase Program at a total cost of **$16.5 million**[166](index=166&type=chunk) [Exhibits](index=33&type=section&id=Item%206.%20Exhibits) This section lists key exhibits, including the Asset Purchase Agreement and required CEO/CFO certifications - Key exhibits filed with this report include: - 10.1: Asset Purchase Agreement with Brandywine Global Investment Management, LLC - 31.1 & 31.2: Certifications of the CEO and CFO - 32.1: Section 1350 Certifications[171](index=171&type=chunk)

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 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 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) | --- | --- | |--- ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 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 000-24498 DIAMOND HILL INVESTMENT GROUP INC. (Exact name of registrant as specified in its charter) | --- | -- ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 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 000-24498 DIAMOND HILL INVESTMENT GROUP INC. (Exact name of registrant as specified in its charter) | --- | --- | | ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 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 000-24498 DIAMOND HILL INVESTMENT GROUP INC. (Exact name of registrant as specified in its charter) Ohio 65-019040 ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 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 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) Ohio 65-0190407 (S ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 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 000-24498 DIAMOND HILL INVESTMENT GROUP INC. (Exact name of registrant as specified in its charter) | --- | |- ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 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 000-24498 DIAMOND HILL INVESTMENT GROUP INC. (Exact name of registrant as specified in its charter) | --- | |------ ...

Table of Contents United States Securities and Exchange Commission Washington, D.C. 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 Commission file number 000-24498 DIAMOND HILL INVESTMENT GROUP, INC. (Exact name of registrant as specified in its charter) | --- | |--------------------------------------------------------------------------------------------------------------------------------| | | | Ohio | | ...