Core Viewpoint - Diamond Hill Capital's "Large Cap Fund" investor letter for Q4 2025 highlights a cautious stance on AI-driven market enthusiasm while emphasizing the attractiveness of fundamentally stable, high-quality, cash-generative businesses [1]. Group 1: Market Overview - Equity markets showed upward momentum in Q4 2025, with the Russell 1000 Value Index increasing by 3.8% [1]. - The information technology sector rose by 11%, and communication services increased by 9%, primarily driven by optimism surrounding AI [1]. - The growth areas of the market contributed significantly to the Index's return in Q4 [1]. Group 2: Fund Performance - The Diamond Hill Large Cap Fund returned 1.41% in Q4 2025, underperforming compared to the Russell 1000 Value Index's 3.8% return [1]. Group 3: EQT Corporation Highlights - EQT Corporation (NYSE:EQT) was introduced as a new addition to the fund, recognized as a leading natural gas producer with a market capitalization of $34.168 billion [2]. - EQT's stock closed at $54.75 per share on February 2, 2026, with a 2.51% return over the past month and a 4.99% increase over the past twelve months [2]. - EQT is noted as the lowest-cost dry gas producer in Appalachia, benefiting from structural advantages such as scale and contiguous acreage [3]. Group 4: Hedge Fund Interest - EQT Corporation is not among the 30 most popular stocks among hedge funds, with 82 hedge fund portfolios holding EQT at the end of Q3 2025, down from 96 in the previous quarter [4]. - While EQT is acknowledged for its investment potential, the company is compared unfavorably to certain AI stocks that are perceived to offer greater upside potential and lower downside risk [4].

Core Viewpoint - EQT Corporation (NYSE:EQT) is identified as one of the most undervalued stocks, with significant projected gains from derivatives in the upcoming quarters [1]. Financial Projections - EQT Corporation anticipates gaining $114 million from derivatives for the fourth quarter of 2025, along with $35 million in net cash settlements from these derivatives [1]. - The company expects to receive $44 million in net cash settlements from its NYMEX natural gas hedge positions and $9 million from basis and liquids hedge positions in the same quarter [2]. - Premiums paid for settled derivatives in the fourth quarter of 2025 are projected to reach $45 million [2]. Analyst Ratings - Three analysts reaffirmed their ratings on EQT Corporation on January 26, with Piper Sandler maintaining a Hold rating and a $50 price target [3]. - Siebert Williams Shank & Co also kept a Hold rating, this time with a $62 price target [3]. - Morgan Stanley assigned a Buy rating with a $69 price target for the stock [3]. Company Overview - EQT Corporation is involved in the production, gathering, and transmission of natural gas, selling to marketers, utilities, and industrial customers primarily in the Appalachian Basin [4].

Core Viewpoint - EQT Corporation is a leading U.S. natural gas production company with a market cap of $34.9 billion, primarily operating in the Appalachian Basin, focusing on the Marcellus and Utica Shales [1] Performance Summary - EQT has underperformed the broader market over the past year, with stock prices increasing by 11.3% compared to the S&P 500 Index's 16.3% gains [2] - Over the past six months, EQT's stock surged 6.1%, while the S&P 500 Index rallied by 9.4% [2] - EQT also lagged behind the Energy Select Sector SPDR Fund's (XLE) gains of 12.6% over the past 52 weeks and 13.6% over the past six months [3] Recent Developments - On January 21, EQT shares rose more than 6% due to a rally in U.S. natural gas stocks, driven by a 24% surge in natural gas prices to a six-week high [4] - For FY2025, analysts expect EQT to deliver an adjusted EPS of $2.90, reflecting an 80.1% year-over-year increase [4] - EQT has a strong track record of earnings surprises, surpassing bottom-line estimates in each of the past four quarters [4] Analyst Ratings - Among 27 analysts covering EQT, the consensus rating is a "Strong Buy," consisting of 20 "Strong Buys," one "Moderate Buy," five "Holds," and one "Strong Sell" [5] - Stephens & Co. lowered its price target on EQT to $68 from $69 but maintained an "Overweight" rating [6] - The mean price target for EQT is $64.32, indicating a 14.2% upside potential, while the highest target of $76 represents a 34.9% premium to current price levels [6]

Investment Rating - The report does not explicitly state an investment rating for the industry Core Insights - The global natural gas industry has undergone a complete cycle from demand collapse and low prices to supply shocks and price surges, leading to a structural reshaping of global trade patterns [2][13] - By 2025, the global natural gas market is expected to be in a state of "tight balance" with demand growth slowing to 0.9% and supply remaining tight due to reliance on North American LNG projects [2][4] - The LNG market is entering a "super expansion cycle" from 2026 to 2030, with an expected cumulative addition of approximately 202 million tons of LNG capacity, primarily concentrated in North America and the Middle East [3][47] Summary by Sections 1. Review of 2020-2024: From Supply Shock to Structural Reshaping of Trade Patterns - The global natural gas industry experienced extreme price fluctuations, with TTF spot prices rising from an average of about 4-5 USD/MMBtu in 2020 to 80-90 USD/MMBtu in August 2022, before falling back to around 10 USD/MMBtu by 2025 [13] - The EU's LNG import share increased from 9% in 2021 to about 19% in 2023, while the US became the largest LNG exporter with 88.4 million tons in 2024 [22] 2. Current Situation in 2025: Tight Balance and Regional Demand Differentiation - The global natural gas market is characterized by a "tight balance" with demand growth slowing to approximately 0.9%, driven by high prices and macroeconomic uncertainties [2][4] - North American LNG supply is expected to increase significantly, with major contributions from projects like Plaquemines and Corpus Christi [32][35] 3. Outlook for 2026-2030: Supply Side - LNG "Super Expansion Cycle" - 2026 is projected to be a critical turning point for the global LNG "super expansion cycle," with an expected cumulative addition of about 202 million tons of LNG capacity, representing a 40% increase from 2025 [3][47] - The supply landscape is shifting from a "multi-polar" to a "US-Qatar dual-core" model, enhancing the pricing power of LNG in global markets [3][47] 4. Outlook for 2026-2030: Demand Side - Moderate Growth and Regional Differentiation - Global natural gas demand is expected to grow at a compound annual growth rate of approximately 1.56% from 2025 to 2030, with significant growth in the Asia-Pacific region, particularly driven by China [4][41] - European demand is anticipated to decline due to renewable energy substitution and decarbonization policies, while North American demand growth is projected to be below 1% [4][41] 5. US Gas Prices: Price Upcycle Driven by LNG Exports and Power Demand - The US natural gas market is transitioning from a tight balance to a shortage, with Henry Hub prices expected to rise significantly by 2027, supported by LNG exports and power demand from data centers [5][6] - The cost of new natural gas wells in the US is projected to stabilize between 3-3.5 USD/MMBtu, providing a long-term price floor for Henry Hub [5][6]

Core Insights - EQT Corporation is recognized as one of the most profitable stocks over the last 20 years [1] - Analysts have recently adjusted price targets for EQT, with Stephens lowering it to $68 and Scotiabank to $63, while maintaining positive ratings [2][3] Financial Performance - Stephens analyst Mike Scialla noted that EQT's Q4 cash flow per share and production estimates are 5% and 1% below consensus, respectively [2] - Scotiabank's projections indicate supply shortages in the U.S. and Western Canada, supporting predictions for higher natural gas prices [3] Company Overview - EQT Corporation is a leading U.S. energy company focused on the production, gathering, and transmission of natural gas, primarily in the Appalachian Basin [4]

Group 1 - EQT Corporation is considered one of the best inexpensive stocks to buy currently, with analysts from Scotiabank and Barclays adjusting their price targets to $63 and $64 respectively [1][2] - Scotiabank's revision of price targets for North American natural gas stocks is based on a bullish outlook, anticipating persistent supply deficits in the US and Western Canada, which is expected to drive commodity prices and energy equities higher [1][3] - Barclays maintains an Overweight rating for EQT while advising caution due to near-term commodity uncertainty, indicating a mixed sentiment in the market [2][3] Group 2 - EQT Corporation is involved in the production, gathering, and transmission of natural gas, selling to various customers in the Appalachian Basin [4]

Core Insights - U.S. natural gas futures have surged above $6 per million British thermal units (MMBtu) for the first time since 2022, driven by an Arctic blast that increased heating demand and constrained supply [1][4][6] - The price increase is expected to enhance profitability for exploration and production companies in the natural gas sector, benefiting diversified energy ETFs that hold these companies [2][6] Factors Behind the Price Surge - The surge in natural gas prices is attributed to intense weather-driven demand due to severe winter conditions, with nearly half of U.S. states declaring emergencies [4] - U.S. natural gas production fell by over 11 billion cubic feet per day due to operational disruptions caused by the storm, tightening supply further [5][6] - Despite robust gas storage levels prior to the storm, the immediate demand for heating created a short-term market squeeze [5] Impact on Companies - Major natural gas producers such as EQT Corporation, Expand Energy, and Coterra Energy are positioned to benefit from higher realized prices [6] - Larger diversified energy companies like ExxonMobil and Chevron, as well as LNG transporters like Kinder Morgan, are also expected to gain from the price rally [7] Advantages of Energy ETFs - Investing in energy ETFs mitigates risks associated with individual stocks, such as operational outages or regulatory hurdles, while providing diversified exposure across the sector [8][9] - Energy ETFs allow investors to capitalize on rising commodity prices and sector-wide profitability without relying on the performance of a single company [9][10] Recommended Energy ETFs - **State Street Energy Select Sector SPDR ETF (XLE)**: AUM of $31.16 billion, exposure to 22 companies, top holdings include ExxonMobil (24.14%) and Chevron (17.58%), up 10.7% over the past year [11][12] - **Vanguard Energy ETF (VDE)**: Net assets of $7 billion, exposure to 107 companies, top holdings include ExxonMobil (22.87%) and Chevron (15.02%), up 19.9% over the past year [13][14] - **Fidelity MSCI Energy Index ETF (FENY)**: Net assets of $1.28 billion, exposure to 101 companies, top holdings include ExxonMobil (22.98%) and Chevron (15.24%), up 10.6% over the past year [15] - **Global X U.S. Natural Gas ETF (LNGX)**: Net assets of $10.48 million, exposure to 34 companies, top holdings include Coterra Energy (8.21%) and Expand Energy (7.25%), up 10.8% over the past year [16][17]

Group 1: AI Market Dynamics - Many AI stocks have experienced significant price increases due to rising demand for AI-related hardware, particularly chips, leading to high valuations that may present more downside risk than upside potential [1] - The demand for energy to power AI chips and data centers is creating robust demand for natural gas, benefiting leading gas producers like EQT [2] Group 2: EQT's Competitive Position - EQT is the only large-scale, vertically integrated natural gas producer in the U.S., with extensive upstream production assets in the Appalachian Basin and strategic midstream infrastructure [4] - The company controls over 1 million undeveloped core net acres across Pennsylvania, Ohio, and West Virginia, making it one of the lowest-cost gas producers at $2 per MMBtu [5] Group 3: Power Demand and Growth Opportunities - U.S. data centers' power demand is projected to rise from nearly 62 gigawatts (GW) last year to over 134 GW by 2030, driving the need for new gas-fired generation [6] - EQT is positioning itself as a leader in supplying gas to the power sector through integrated gas supply and midstream contracts for large-scale projects, including the 3.6 GW Shippingport Power Station and the 4.4 GW Homer City redevelopment project [7]

Group 1: Company Overview - EQT Corporation (NYSE:EQT) is a vertically integrated natural gas company focusing on production and midstream operations in the Appalachian Basin, delivering reliable gas supply and infrastructure solutions across the U.S. [5] Group 2: Analyst Sentiment and Price Targets - Analysts have mixed sentiment on EQT ahead of its Q4 results, scheduled for announcement on February 17, 2026 [2] - Barclays reduced its price target on EQT from $67 to $64 while maintaining an 'Overweight' rating, citing resilience in the upstream sector's cash return model amid macro volatility [3] - Bank of America Securities lowered its price target on EQT from $84 to $74, reiterating a 'Buy' rating, while expressing concerns over rising oversupply risks in 2027 and downward revisions to natural gas price forecasts [4]

Group 1 - EQT Corporation (NYSE:EQT) is recognized as one of the best AI energy stocks to buy currently [1] - Mixed analyst sentiment is observed ahead of EQT's Q4 results, which are set to be announced on February 17, 2026 [2] - Barclays has reduced its price target for EQT from $67 to $64 while maintaining an 'Overweight' rating, citing resilience in the upstream sector's cash return model despite macro volatility [3] - Bank of America Securities has lowered its price target for EQT from $84 to $74, reiterating a 'Buy' rating, while expressing concerns over rising oversupply risks in 2027 and downward revisions to natural gas price forecasts [4] Group 2 - EQT Corporation operates as a vertically integrated natural gas company, focusing on production and midstream operations in the Appalachian Basin, providing reliable gas supply and infrastructure solutions across the U.S. [5]