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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Madison Mid Cap Fund 2023 Q4 Investor Letter | Buyside Digest

Back to Fund Profile (Madison Mid Cap Fund)

Primary Source Intelligence • Q4 2023 Letter Analysis

Madison Mid Cap Fund Quarterly Analysis

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

Fund Returns

QTD+14.3%

YTD+26.5%

Annualized+10.01%

Positioning StanceConstructive

Market CapMid Cap

GeographyUS

Digest Analysis

Quick Take

"Madison Mid Cap outperformed in Q4 with strong stock selection in technology, retail, and banking. The fund maintains concentrated positions in quality companies like Gartner, Dollar Tree, and Arista Networks that are gaining market share despite challenging environments."

Executive Summary

The Madison Mid Cap Fund returned 14.3% in Q4 2023, outperforming the Russell Midcap Index's 12.8% return, driven by strong performance from Gartner, Dollar Tree, Arista Networks, Glacier Bancorp, and Ross Stores. The fund's concentrated approach focuses on high-quality companies trading below intrinsic value. Technology holdings like Gartner showed signs of spending recovery while Arista Networks continued robust growth despite Cloud Titan slowdown. Retail positions Dollar Tree and Ross Stores gained market share in challenging environments. Insurance holdings benefited from favorable market conditions, though the managers reduced exposure by selling Markel Group and Progressive for risk management. The portfolio was rebalanced with proceeds deployed into five new positions offering superior risk/reward opportunities. Key risks include continued technology spending weakness, retail environment challenges, and competitive pressures in telecommunications. Catalysts include potential technology spending inflection, improving bank profitability from rate changes, and sustained insurance pricing power from favorable supply-demand dynamics.

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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 thesis explanations for individual holdings. Named positions with clear rationales and willingness to trim winners while adding new names shows strong conviction, though not at the extreme level.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers acknowledge challenging environments across retail, technology spending, and used car markets, but express confidence in long-term prospects and see signs of potential improvement in technology spending. Mixed outlook with cautious optimism.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

The fund maintains concentrated positions but engaged in risk management by selling two insurance holdings and trimming an outsized position. Portfolio rebalancing suggests selective risk-taking rather than aggressive deployment.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

The fund engaged in capital rotation by selling two positions and trimming one, then redeploying proceeds into five new positions. This represents portfolio rebalancing rather than net new capital deployment, as no cash level changes were mentioned.

Forward Guidance

20%

CautiousExpansionary

Cautious (20%)

Managers deployed proceeds into five new positions where they identified superior opportunities, indicating selective deployment bias. However, the sales and trimming activity suggests measured rather than aggressive forward positioning.

Language Signal

30%

BearishBullish

Bearish (30%)

Language includes positive terms like 'confident,' 'optimistic,' 'superior opportunities,' and 'encouraged,' but balanced with acknowledgment of 'challenging environments,' 'disappointing trends,' and 'difficult markets.' Moderately more positive than negative directional language.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Managers acknowledge multiple sector-specific risks including challenging retail environments, technology spending slowdown, weak used car markets, and competitive pressures. Risks are discussed but not characterized as systemic or extreme threats.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The managers identified five new positions with 'superior risk/reward opportunities' and maintain optimism about existing holdings' prospects. This suggests a moderately rich opportunity set, though selectivity is emphasized given the challenging environment.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The managers express confidence in 'long-run growth potential' and reference a 'multi-year investment period' for Dollar Tree. The approach focuses on intrinsic value and fundamental business quality, suggesting a multi-year investment horizon typical of value-oriented mid cap strategies.