Live Oak Bancshares (LOB) Fell Due To Credit Issues

Diamond Hill Capital, an investment management company, released its “Small Cap Fund” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q1, markets were uneven due to the new presidential administration’s activity, leading to concern about the future. The Russell 3000 Index fell by 4.7% in Q1, the first quarterly loss since Q3 2023. Diamond Hill Small Cap Fund returned -11.56% in Q1, trailing the Russell 2000 Index’s -9.48% return. For more information on the fund’s top picks in 2025, please check its top five holdings.

In its first-quarter 2025 investor letter, Diamond Hill Small Cap Fund highlighted stocks such as Live Oak Bancshares, Inc. (NYSE:LOB). Headquartered in Wilmington, North Carolina, Live Oak Bancshares, Inc. (NYSE:LOB) is a bank holding company for Live Oak Banking Company that offers commercial banking products and services. The one-month return of Live Oak Bancshares, Inc. (NYSE:LOB) was 12.99%, and its shares lost 25.73% of their value over the last 52 weeks. On May 5, 2025, Live Oak Bancshares, Inc. (NYSE:LOB) stock closed at $26.93 per share with a market capitalization of $1.189 billion.

Diamond Hill Small Cap Fund stated the following regarding Live Oak Bancshares, Inc. (NYSE:LOB) in its Q1 2025 investor letter:

"Among our bottom individual Q1 contributors were Triumph Financial and Live Oak Bancshares, Inc. (NYSE:LOB). Shares of regional bank Live Oak Bancshares were pressured as it faced credit issues during the quarter, as well as auditor questions regarding its review process. However, we believe the company has carved out an attractive lending niche to small businesses and could position itself well to become a go-to lender for small businesses in the US."

Live Oak Bancshares, Inc. (NYSE:LOB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held Live Oak Bancshares, Inc. (NYSE:LOB) at the end of the fourth quarter, compared to 10 in the third quarter. While we acknowledge the potential of Live Oak Bancshares, Inc. (NYSE:LOB) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we covered Live Oak Bancshares, Inc. (NYSE:LOB) and shared SouthernSun Small Cap Strategy's views on the company. In addition, please check out our hedge fund investor letters Q1 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.