Acquisition Announcement Lifted Mr. Cooper Group (COOP) in Q2

Diamond Hill Capital, an investment management company, released its “Small-Mid Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q2, the market surged uniformly for the rest of the quarter following a sharp decline in April due to President Trump’s “Liberation Day” tariffs announcement. The portfolio returned 5.60% (gross) and 5.37% (net) compared to an 8.59% return for the Russell 2500 Index. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its second-quarter 2025 investor letter, Diamond Hill Small-Mid Cap Fund highlighted stocks such as Mr. Cooper Group Inc. (NASDAQ:COOP). Mr. Cooper Group Inc. (NASDAQ:COOP) is a residential loan servicing company. The one-month return of Mr. Cooper Group Inc. (NASDAQ:COOP) was 25.81%, and its shares gained 109.81% of their value over the last 52 weeks. On August 11, 2025, Mr. Cooper Group Inc. (NASDAQ:COOP) stock closed at $180.27 per share, with a market capitalization of $11.536 billion.

Diamond Hill Small-Mid Cap Fund  stated the following regarding Mr. Cooper Group Inc. (NASDAQ:COOP) in its second quarter 2025 investor letter:

"Other top contributors in Q2 included Regal Rexnord, Mr. Cooper Group Inc. (NASDAQ:COOP) and Gates Industrial. Shares of mortgage servicing company Mr. Cooper Group rose as investors increasingly appreciate the valuation potential created by Rocket Companies’ announced acquisition of Mr. Cooper Group."

Mr. Cooper Group Inc. (NASDAQ:COOP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 43 hedge fund portfolios held Mr. Cooper Group Inc. (NASDAQ:COOP) at the end of the first quarter, which was 38 in the previous quarter. While we acknowledge the potential of Mr. Cooper Group Inc. (NASDAQ:COOP) 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 Mr. Cooper Group Inc. (NASDAQ:COOP) and shared the list of undervalued momentum stocks that are taking off. In addition, please check out our hedge fund investor letters Q2 2025 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.