| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.72% | -2.66% | -2.66% |
The Madison Large Cap Fund declined 2.7% in Q1 2026 versus the S&P 500's 4.3% decline, benefiting from stock selection despite sector allocation headwinds. The quarter saw market broadening from mega-cap technology to physical economy companies, driven by improving economic outlook and AI disruption fears. The HALO trade favored heavy asset, low obsolescence companies over asset-light software firms vulnerable to AI commoditization. Top contributors included semiconductor companies Keysight, Analog Devices, and Texas Instruments, which benefited from datacenter demand and end market recovery. Industrial names Deere and PACCAR also performed well as the worst of their downcycles appeared behind them. Detractors included AI-vulnerable companies like Gartner, Workday, and life science tools firms Danaher and Agilent. The managers initiated positions in Meta Platforms and Salesforce while exiting Starbucks and Accenture. The portfolio's lack of exposure to outperforming sectors like Energy and Materials created headwinds, but strong stock selection in technology and industrials provided relative outperformance.
The fund focuses on high-quality, concentrated holdings of 25-40 large-cap stocks with emphasis on risk management and downside protection, seeking companies with strong fundamentals that can navigate market transitions and technological disruption.
The managers expect Gartner's results to steadily improve in the coming year due to product and analyst team enhancements. They believe Danaher and Agilent will see continued end market recovery in 2026, albeit at a slower pace than hoped. For Meta, they expect strong revenue growth from user growth and improved app monetization.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 18 2026 | 2026 Q1 | A, ADI, CRM, DE, DHR, IT, KEYS, META, PCAR, SBUX, TXN, WDAY | AI, large cap, Quality, semiconductors, technology, value |
CRM META |
Madison Large Cap outperformed the S&P 500 in Q1 2026 despite sector allocation headwinds, as AI disruption fears drove market rotation from software to physical economy companies. Strong semiconductor and industrial holdings offset weakness in AI-vulnerable names. New positions in Meta and Salesforce reflect opportunistic buying of quality companies trading at attractive valuations due to AI concerns. |
| Jan 20 2026 | 2025 Q4 | A, ACGL, ADI, AMZN, BN, CDW, CPRT, DHR, FERG, FI, GOOGL, HON, KEYS, LOW, NKE, PCAR, PGR, PH, TXN, WDAY | AI, Automation, financials, industrials, large cap, Quality, technology, value |
FISV WDAY |
Madison Large Cap Fund outperformed in Q4 2025 with a 3.43% return versus 2.66% for the S&P 500. The quality-focused strategy faced headwinds in 2025's momentum-driven market but managers remain committed to investing in durable businesses at reasonable prices. Portfolio activity included adding Workday and Honeywell while exiting Fiserv and Nike. Outlook is cautiously optimistic for 2026. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI disruption fears triggered sell-offs in asset-light software and services companies viewed as vulnerable to commoditization. However, AI is also creating new demand for optical equipment, electrical equipment, and datacenter products. Some companies like Salesforce are leveraging AI to enhance their platforms. |
Disruption Commoditization Datacenter Software Optical |
SemiconductorsAnalog semiconductor companies Analog Devices and Texas Instruments reported strong results due to improving end market conditions and growing demand for datacenter products. The semiconductor cycle appears to be recovering from recent weakness. |
Analog Datacenter Recovery Cycle | |
| 2025 Q4 |
AIPershing Square views AI as a major driver of market performance and structural growth, particularly benefiting megacap technology companies. The firm has positioned in AI beneficiaries like Alphabet, Amazon, and Meta, seeing AI integration as a key catalyst for these businesses. They believe AI-driven earnings growth justifies higher market multiples for leading technology companies. |
Artificial Intelligence Technology Cloud Data Centers Semiconductors |
BuybacksPSH has aggressively repurchased its own shares as a strategy to address the discount to NAV, buying back 74 million shares representing 29.7% of initial shares outstanding at an average discount of 29%. The firm views share buybacks as value-accretive when trading below intrinsic value. Share buybacks contributed 1.2% to 2025 performance. |
Share Repurchases Capital Allocation Discount to NAV | |
DividendsPSH has implemented a progressive dividend policy where dividends increase with NAV growth. The quarterly dividend has increased 84% from $0.10 per share in 2019 to $0.1837 per share currently. This dividend strategy is part of their approach to address the discount to NAV and provide shareholder returns. |
Dividend Policy Shareholder Returns Income | |
Private CreditThrough the HHH strategic transaction and Vantage acquisition, PSH is gaining exposure to specialty insurance and reinsurance, which provides access to private credit markets and alternative investment opportunities. The Vantage acquisition represents a $2.1 billion investment in the insurance sector, diversifying PSH's earnings streams. |
Insurance Reinsurance Alternative Investments |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 18, 2026 | Fund Letters | Madison Large Cap Fund | CRM | Salesforce.com | Software - Application | Application Software | Bull | New York Stock Exchange | AI, Cloud computing, CRM, Enterprise software, Large Enterprises, SaaS, share repurchase | Login |
| Apr 18, 2026 | Fund Letters | Madison Large Cap Fund | META | Meta Platforms | Internet Content & Information | Interactive Media & Services | Bull | NASDAQ | AI, capital expenditures, digital advertising, platform, social media, User growth, WhatsApp Monetization | Login |
| Jan 20, 2026 | Fund Letters | Rich Eisinger | FISV | Fiserv, Inc. | Information Technology | Data Processing & Outsourced Services | Bear | New York Stock Exchange | Execution, Growthreset, Payments | Login |
| Jan 20, 2026 | Fund Letters | Rich Eisinger | WDAY | Workday, Inc. | Information Technology | Application Software | Bull | NASDAQ | AI, growth, Margins, Software | Login |
| TICKER | COMMENTARY |
|---|---|
| KEYS | Electronic test and measurement company Keysight Technologies again reported strong quarterly results and an even better outlook. Along with Keysight's core end markets returning to growth, it is benefiting from growing demand for AI-specific use cases in optical and electrical equipment. |
| ADI | Analog Devices reported strong results and a good outlook due to the concurrent improvement of end market conditions and demand for products used in datacenters. |
| TXN | Texas Instruments reported strong results and a good outlook due to the concurrent improvement of end market conditions and demand for products used in datacenters. |
| DE | While end market conditions remain subdued in agriculture equipment, it appears that the worst of the recent downcycle is likely behind us. Furthermore, Deere stocks also benefited from investors favoring the HALO trade during the quarter. As a result, we modestly trimmed our holdings when valuations, in our view, began to incorporate a recovery in profits. |
| PCAR | While end market conditions remain subdued in commercial trucking, it appears that the worst of the recent downcycle is likely behind us. Furthermore, PACCAR stocks also benefited from investors favoring the HALO trade during the quarter. As a result, we modestly trimmed our holdings when valuations, in our view, began to incorporate a recovery in profits. |
| IT | Gartner shares were down following another quarter of disappointing subscription revenue growth. The results added fuel to investor concerns of potential disruption risk from AI. While likely not totally immune, the company has made several enhancements to the core product and analyst team which we believe will be reflected in results steadily improving in the coming year. |
| DHR | Danaher reported results broadly consistent with expectations. However, while the company's outlook for 2026 calls for continued end market recovery, it was at a slower pace than investors hoped. Furthermore, investors appear to also have ascribed some level of AI risk to these companies on the belief that AI technology could enable customers to simulate research experiments, thus reducing the need to purchase instruments and consumables used for physical experiments in the lab. |
| WDAY | Shares of Workday continue to be severely punished as both are deemed to have AI risk. Results at Workday continue to be resilient, which isn't a surprise considering its high customer retention rates and large pipeline of prospects set to become paying customers. However, results currently aren't good enough to disprove the AI disruption concerns. |
| A | Agilent reported results broadly consistent with expectations. However, while the company's outlook for 2026 calls for continued end market recovery, it was at a slower pace than investors hoped. Furthermore, investors appear to also have ascribed some level of AI risk to these companies on the belief that AI technology could enable customers to simulate research experiments, thus reducing the need to purchase instruments and consumables used for physical experiments in the lab. |
| META | Meta Platforms owns three dominant, global social network and communications apps in Facebook, Instagram, and WhatsApp. We believe revenue growth will remain strong as its user count grows and monetization of its apps improves. Meta is investing heavily in AI and seeing real benefits in the personalization and efficacy of ads in its social network. Additionally, WhatsApp is finally starting to commercialize its business after many years of focusing on acquiring users. Investors are concerned about increasing capital expenditures, but we believe much of it will garner strong returns, and management will remain prudent in managing spending over the long term. |
| CRM | Salesforce is the leading provider of customer relationship management and related software with an especially strong position among large enterprises. The business generates immense cash flow, and over the past several years, has appropriately shifted its capital allocation policies to reflect its more mature status. For example, shortly after we initiated our investment, Salesforce announced a $25 billion accelerated share repurchase plan, which we expect will be additive to per share value. While AI presents a potential threat, we believe Salesforce can leverage its operating platform, distribution, and deep customer relationships to commercialize its own suite of AI products. The market has punished its shares on the AI disruption risk and the stock trades for a low-to-mid-teens P/E ratio, which is unduly low in our view. |
| SBUX | We are encouraged by CEO Brian Niccol's turnaround plan and believe margins will materially increase over the coming years. However, in our view, the valuation already incorporates healthy margin expansion and revenue growth. Thus, there is little room for error if it takes longer for margins to improve or sales growth has a hiccup, so we elected to sell our shares. |
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