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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Madison Investors Fund 2023 Q1 Investor Letter | Buyside Digest

Back to Fund Profile (Madison Investors Fund)

Primary Source Intelligence • Q1 2023 Letter Analysis

Madison Investors Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Madison Investors Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+6.5%

Annualized+9.64%

Positioning StanceConstructive

GeographyUS

Digest Analysis

Quick Take

"Madison Investors Fund navigated Q1 2023 banking volatility by adding Charles Schwab during panic selling while maintaining conviction in U.S. Bancorp."

Executive Summary

Madison Investors Fund returned 6.5% in Q1 2023, slightly trailing the S&P 500's 7.5% gain as tech-heavy Nasdaq surged 17%. Top contributors included Analog Devices, which bucked semiconductor industry weakness due to supply constraints in analog chips, and Alphabet, which the fund views as well-positioned despite ChatGPT concerns. The banking sector panic created opportunities, with the fund adding Charles Schwab during March declines while maintaining U.S. Bancorp despite sector-wide selling. The managers believe investors are failing to distinguish between strong and weak banks, creating value opportunities in well-managed institutions. Schwab benefits from its unique model where cash sorting keeps assets within the platform, while U.S. Bancorp appears to be gaining deposits from the flight to safety. Portfolio activity remained low with one purchase and one sale, reflecting the fund's patient approach to capital deployment. The team maintains confidence in their quality-focused strategy despite near-term market volatility.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

The fund demonstrates high conviction through concentrated holdings (29 total positions), specific position sizing decisions, and detailed fundamental analysis of individual companies. Managers provide clear rationale for adding Schwab and maintaining banking exposure despite sector stress.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers acknowledge market volatility and banking sector concerns but express confidence that regulatory support will prevent systemic issues. They view current conditions as creating selective opportunities rather than broad market threats.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

The fund added one new position (Schwab) during market stress and maintained existing holdings despite sector pressures. They demonstrate selective risk-taking while managing exposure through position sizing limits in banking.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

Portfolio activity was explicitly described as low with one purchase and one sale. The Schwab purchase was funded by selling Black Knight, representing capital rotation rather than net deployment. No indication of meaningful cash level changes.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

The managers indicate they will continue monitoring developments closely, particularly in AI and banking, while maintaining their quality-focused investment approach. They express readiness to act on opportunities created by market dislocations.

Language Signal

35%

BearishBullish

Bearish (35%)

Language includes positive terms like 'opportunities,' 'strong franchises,' and 'confidence' balanced against risk acknowledgment around 'volatility,' 'panic,' and 'uncertainty.' Overall tone is cautiously constructive.

Perceived Risk

55%

Low RiskElevated

Moderate Risk (55%)

The managers identify specific risks including banking contagion, cash sorting dynamics, and AI competitive threats. They discuss risk management through sector exposure limits and acknowledge uncertainty around multiple developments requiring close monitoring.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The managers describe market dislocations as creating 'selective opportunities' in quality franchises trading at discounts. They successfully identified and acted on the Schwab opportunity while maintaining conviction in existing holdings despite sector pressures.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The fund emphasizes long-term competitive positioning, management's strategic choices 'for the long term,' and confidence in companies' ability to grow 'for the foreseeable future.' Low portfolio turnover (18%) and patient approach to capital deployment indicate multi-year investment horizons.