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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Madison Investors Fund 2024 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Madison Investors Fund)

Primary Source Intelligence • Q3 2024 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+7.8%

Annualized+9.64%

Digest Analysis

Quick Take

"Madison Investors outperformed in Q3 with quality holdings like Parker-Hannifin and Fiserv driving returns. Fed rate cuts boosted rate-sensitive names while consumer weakness hurt Dollar Tree."

Executive Summary

Madison Investors Fund returned 7.80% in Q3 2024, outperforming the S&P 500's 5.89% return, driven by strong performance from Parker-Hannifin, Fiserv, Lowe's, Brookfield Corporation, and Progressive. The fund's approach centers on owning high-quality businesses with sustainable competitive advantages. Key contributors included Parker-Hannifin's margin improvement despite industrial headwinds, Fiserv's growing Clover payment platform with difficult-to-replicate distribution advantages, and rate-sensitive names like Lowe's and Brookfield benefiting from Fed rate cut expectations. Detractors included Dollar Tree facing consumer weakness, Alphabet dealing with antitrust concerns, and PACCAR experiencing freight market softness. The managers added Keysight Technologies, a mission-critical electronic test equipment company, at attractive valuations during a temporary demand downturn. They sold Brookfield Asset Management to fund new opportunities while maintaining exposure through Brookfield Corporation. The team remains confident in long-term prospects despite near-term cyclical challenges, focusing on companies positioned to benefit from structural trends like digitization and rate normalization.

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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%)

High conviction evident through concentrated 30-position portfolio with detailed thesis explanations for individual holdings. Managers provide specific reasoning for each position, demonstrate willingness to add during weakness (Keysight), and express long-term confidence despite near-term challenges. Portfolio construction and specific position commentary indicate strong conviction levels.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The managers acknowledge challenging near-term conditions including slowing industrial economy, weak consumer environment, and softening demand across multiple sectors, but express confidence in long-term structural trends like digitization and expect rate cuts to provide tailwinds.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

Portfolio remains fully invested with selective activity - added one new position (Keysight) and sold one (Brookfield Asset Management). No indication of defensive positioning or cash raising, suggesting maintained but measured risk appetite.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

Minimal net deployment activity with one purchase (Keysight) funded by one sale (Brookfield Asset Management). This represents capital rotation rather than net deployment, with proceeds from sales funding new positions rather than adding fresh capital to work.

Forward Guidance

20%

CautiousExpansionary

Cautious (20%)

Managers express confidence in long-term prospects and willingness to add positions at attractive valuations during weakness, but acknowledge uncertainty about timing of recovery in several end markets. Selective deployment bias evident in Keysight purchase.

Language Signal

10%

BearishBullish

Bearish (10%)

Language is balanced with significant discussion of headwinds, challenges, and softening conditions across multiple holdings, offset by confidence in long-term prospects and structural trends. Risk language slightly outweighs opportunity language.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Moderate risk acknowledgment with discussion of slowing industrial economy, weak consumer environment, competitive pressures, and regulatory concerns (Alphabet antitrust). Risks are identified and discussed but not characterized as systemic or extreme threats.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

Managers see selective opportunities, evidenced by adding Keysight at attractive valuations during weakness. They identify specific situations where poor sentiment creates buying opportunities, suggesting moderate opportunity density in their investment universe.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Strong emphasis on long-term investing with explicit statements about long-term prospects, structural trends like digitization, and willingness to hold through cyclical downturns. Managers focus on multi-year thesis realization rather than near-term catalysts, consistent with their stated long-term approach.