Diamond Hill Small Cap Strategy Bets on Deeply Discounted Alexandria Real Estate Equities (ARE). Here’s Why

Group 1: Market Overview - The fourth quarter of 2025 saw favorable gains in equity markets, with the Russell 2000 Index returning 2.19% and the Russell 1000 Index gaining 2.41% [1] - Health care was the best-performing sector in the Russell 2000 Index, with an impressive return of 18.6% [1] - Despite heightened uncertainty and geopolitical risks, the Russell 2000 Index posted a 12.81% gain for the year [1] Group 2: Diamond Hill Small Cap Strategy Performance - The Diamond Hill Small Cap Strategy achieved a return of 4.88% (net of fees) in the fourth quarter, outperforming the Russell 2000 Index [1] - The firm continues to focus on resilient businesses capable of sustaining earnings in a volatile market environment as it heads into 2026 [1] Group 3: Alexandria Real Estate Equities, Inc. (NYSE:ARE) Insights - Alexandria Real Estate Equities, Inc. is a life science REIT and the largest owner of US life-sciences real estate, focusing on major biotech research clusters [3] - The company has faced challenges due to higher interest rates, lower venture capital funding, regulatory pressures, and overbuilding of lab space, leading to a significant reduction in earnings and a dividend cut [3] - Despite a 42.76% decline in shares over the past twelve months, the company maintains a solid balance sheet and a well-located portfolio [3] - Alexandria Real Estate Equities, Inc. has a market capitalization of $9.585 billion and delivered a 3.83% return in the past month [2] Group 4: Hedge Fund Interest - Alexandria Real Estate Equities, Inc. was held by 31 hedge fund portfolios at the end of the third quarter, a decrease from 33 in the previous quarter [5] - While the potential of Alexandria Real Estate Equities, Inc. as an investment is acknowledged, certain AI stocks are considered to offer greater upside potential with less downside risk [5]