Broader Macroeconomic Concerns Pressured Bank of America Corporation (BAC) Shares in Q2

Diamond Hill Capital, an investment management company, released its “Select Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Markets rebounded from a sharp downturn at the start of April following the President’s “Liberation Day” tariffs announcement. As measured by the Russell 3000 Index, US stocks rose approximately 11%. Large-cap stocks saw the highest increase this quarter, rising just over 11%, while small-cap and mid-cap stocks gained approximately 8.5% each. The portfolio delivered positive results in the quarter but trailed the Russell 3000 Index. The strategy returned 7.31% (net) vs 10.99% for the index. To get an idea of the fund’s best choices for 2025, check out its top 5 positions.

In its second-quarter 2025 investor letter, Diamond Hill Capital Select Strategy highlighted stocks such as Bank of America Corporation (NYSE:BAC). Bank of America Corporation (NYSE:BAC) is a financial institution that offers various financial products and services for individual consumers, small and middle-market businesses, institutional investors, large corporations, and governments. The one-month return of Bank of America Corporation (NYSE:BAC) was 3.97%, and its shares gained 33.66% of their value over the last 52 weeks. On September 29, 2025, Bank of America Corporation (NYSE:BAC) stock closed at $52.42 per share, with a market capitalization of $388.272 billion.

Diamond Hill Capital Select Strategy stated the following regarding Bank of America Corporation (NYSE:BAC) in its second quarter 2025 investor letter:

"Other bottom contributors included Bank of America Corporation (NYSE:BAC), lululemon athletica and CarMax. Shares of banking and financial services company Bank of America were pressured early in the quarter amid broader macroeconomic concerns. We exited our position to manage our banking exposure and in favor of Capital One, which we believe offers better long-term upside potential — however, the timing of that shift hurt relative performance in Q2."

Bank of America Corporation (NYSE:BAC) is in 24th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 115 hedge fund portfolios held Bank of America Corporation (NYSE:BAC) at the end of the second quarter, compared to 117 in the previous quarter.  While we acknowledge the potential of Bank of America Corporation (NYSE:BAC) 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 Bank of America Corporation (NYSE:BAC) and shared the list of best cheap quarterly dividend stocks. 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.