Bank OZK (OZK) Fell on a Tepid Yearly Outlook

Diamond Hill Capital, an investment management company, released its “Small Cap Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fourth quarter posted another period of favorable gains for equity markets, with the Russell 2000 Index returning 2.19%, roughly in line with the Russell 1000 Index’s 2.41% gain. Health care (+18.6%) emerged as the best-performing sector in the Russell 2000 Index. Heightened uncertainty and geopolitical risks contributed to a mixed market environment in 2025 and Q4, yet the Russell 2000 Index still posted a 12.81% gain for the year. Heading into 2026, the firm continues to focus on resilient businesses that can sustain earnings in a volatile landscape. The Strategy returned 4.88% (net of fees) in the quarter compared to the Russell 2000 Index’s 2.19% gain. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Diamond Hill Small Cap Strategy highlighted Bank OZK (NASDAQ:OZK) as one of the leading detractors. Headquartered in Little Rock, Arkansas, Bank OZK (NASDAQ:OZK) is a regional bank that provides retail and commercial banking services. On February 4, 2026, Bank OZK (NASDAQ:OZK) stock closed at $50.03 per share. Bank OZK (NASDAQ:OZK) delivered a 4.08% return in the past month, and its shares are down 5.64% over the past twelve months. Bank OZK (NASDAQ:OZK) has a market capitalization of $5.597 billion.

Diamond Hill Small Cap Strategy stated the following regarding Bank OZK (NASDAQ:OZK) in its fourth quarter 2025 investor letter:

"Bank OZK (NASDAQ:OZK), a regional bank with an established expertise in commercial real estate lending, saw shares decline following Q3 earnings as management communicated a more tepid earnings outlook for 2026. An increasing group of anticipated loan payoffs points to more challenging loan growth, while continued investment in the franchise is expected to drive higher expenses. Together, these factors will weigh on 2026 earnings growth, but long-term earnings potential remains intact."

Bank OZK (NASDAQ:OZK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 42 hedge fund portfolios held Bank OZK (NASDAQ:OZK) at the end of the third quarter, up from 34 in the previous quarter. While we acknowledge the potential of Bank OZK (NASDAQ:OZK) 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 OZK (NASDAQ:OZK) and shared a list of best dividend aristocrat stocks to invest in. In addition, please check out our hedge fund investor letters Q4 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.