Diamond Hill Investment Group, Inc. Reports Results for Third Quarter 2006

Company Release - 11/1/2006 4:20 PM ET

COLUMBUS, Ohio, Nov. 1 /PRNewswire-FirstCall/ -- Diamond Hill Investment Group, Inc. (Nasdaq: DHIL) today reported unaudited results for the quarter ended September 30, 2006. Assets under management increased by 171% to $3.117 billion compared to $1.150 billion at the end of the third quarter of 2005 while investment management revenue of $5.5 million for the quarter increased by 67% compared to 2005. Revenue in 2005 included $1.6 million in performance incentive fees compared to $0 incentive fees earned in the third quarter of 2006. Net income for the quarter was $1.36 million or $0.61 per diluted share compared to net income of $90 thousand or $0.04 per diluted share in 2005.

Ric Dillon, president and chief investment officer stated, "Our primary business objective is to produce excellent long-term investment returns for our clients. For the quarter ending September 30, 2006 our investment returns in our equity strategies were below benchmarks, while our strategic income strategy was above its benchmark. We are pleased that all of our strategies are above their benchmarks since their respective inceptions." Jim Laird, chief financial officer, stated, "New client investments in the quarter were $422 million, up 56% from the third quarter of 2005 but down 24% from the second quarter of 2006. We are expanding efforts to grow our business specifically by adding resources to sell our funds into the wirehouse and regional broker dealer markets and our ongoing efforts to market our private funds to institutional clients in the U.S. and abroad."



    Three months ended September 30     Q3 2006           Q3 2005     Change

    Investment management revenue     $5,511,418        $3,297,315      67%
      Net operating income            $1,424,936        ($113,037)      n.m.
      Net operating income margin         26%              n.m.
    Mutual fund administration, net     $596,223          ($9,007)      n.m
    Investment return                   $113,187          $211,718     (47%)
      Pre-tax income                  $2,134,346           $89,674      n.m.
      Pre-tax income margin               39%                3%
    Net income                        $1,362,245           $89,674      n.m.
    Earnings per share - diluted        $0.61             $0.04         n.m.
      Assets under management       $3.117 billion    $1.150 billion    171%

    Nine months ended September 30     YTD 2006          YTD 2005     Change

    Investment management revenue    $15,749,381        $5,876,677      168%
      Net operating income            $4,101,139          $732,735      459%
      Net operating income margin         26%               12%
    Mutual fund administration, net   $1,220,062        ($126,709)      n.m
    Investment return                   $903,287          $378,469      139%
      Pre-tax income                  $6,224,488          $984,495      533%
      Pre-tax income margin               40%               17%
    Net income                        $3,983,025          $984,495      305%
    Earnings per share - diluted         $1.81              $0.50       262%

    About Diamond Hill:

Diamond Hill provides investment management services to institutions and financial intermediaries seeking to preserve and build capital. The firm currently manages mutual funds, separate accounts and private investment funds. For more information on Diamond Hill, visit http://www.diamond-hill.com.

SOURCE Diamond Hill Investment Group, Inc.

Contact: Investors, James F. Laird, Chief Financial Officer of Diamond Hill Investment Group, Inc., +1-614-255-3353, or jlaird@diamond-hill.com
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