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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Madison Large Cap underperformed in Q2 as AI mania drove extreme market narrowness comparable to the late 1990s bubble. Semiconductor and Cloud holdings delivered strong results, but the managers actively avoid the euphoria, warning that obvious winners today may not be winners tomorrow."
The Madison Large Cap Fund returned 8.4% in Q2 2026, underperforming the S&P 500's 15.2% as a narrow group of 50-60 AI data center-related stocks powered virtually all market gains. The managers draw explicit parallels to the late 1990s internet bubble, noting the current market narrowness exceeds even that period. Top contributors included semiconductor holdings Texas Instruments, Analog Devices, and Keysight Technologies, which benefited from strong datacenter demand, plus Alphabet's exceptional Cloud growth (60%+ revenue growth, doubled backlog). The fund initiated a position in Intercontinental Exchange at decade-low valuations, viewing AI concerns as misplaced, and received Honeywell Aerospace shares through a spinoff. Detractors included housing-exposed names like Lowe's and Ferguson, pressured by stubbornly high interest rates. The managers express deep concern about investor risk appetite and willingness to pay high prices for uncertain AI outcomes, warning that euphoria will dissipate and booms will be followed by busts. They position the portfolio in quality companies with both growth prospects and resiliency to multiple macro risks including unpredictable policy, expanding deficits, inflation, and geopolitical volatility.
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