Why Diamond Hill Stayed Focused on Magnolia Oil & Gas (MGY) After the Geopolitical Selloff

Diamond Hill Capital, a First Eagle Investment Management company, highlighted Magnolia Oil & Gas Corporation (NYSE: MGY) in its Q2 2026 Small Cap Strategy investor letter. The strategy outperformed the Russell 2000 Index with a 24.01% return, driven by strong small-cap equities benefiting from earnings, resilient conditions, and easing geopolitical concerns. However, energy stocks, including MGY, declined due to lower oil prices.

Magnolia Oil & Gas Corporation is a US-based independent oil and natural gas company. Despite a decline in shares following the resolution of the US-Iran war and the reopening of the Strait of Hormuz, the market saw reduced risk of supply disruption, diminishing the war-related risk premium. MGY has a market capitalization of $6.56 billion.

Although not among the 40 Most Popular Stocks Among Hedge Funds, 32 hedge fund portfolios held MGY at the end of Q2 2026. Diamond Hill Capital believes other AI stocks may offer greater upside potential and less downside risk.