Madison Investments , an investment advisor, released its "Madison Small Cap Fund" Q3 2026 investor letter. A copy of the letter can be downloaded here . The Fund outperformed its small-cap benchmarks during the third quarter of 2026, despite a challenging environment for quality-focused investors as speculative AI-related stocks retreated, inflation remained persistent, and rising bond yields pressured rate-sensitive businesses. The Fund's Class R6 shares declined 5.80%, compared with losses of 7.23% for the Russell 2000 and 6.37% for the Russell 2500, with stock selection driving the relative outperformance while sector allocation detracted. Technology was the strongest sector relative to the benchmark, helped by a recovery in software stocks as strong results eased concerns about AI disruption, while health care also rebounded on strength in core holdings. Industrials and consumer staples were the weakest areas, reflecting pressure on construction-related businesses and continued weakness in select consumer products companies. Looking ahead, Madison remains focused on high-quality companies with strong balance sheets, durable market positions, and attractive valuations, while waiting for better opportunities as market speculation fades and fundamentals regain importance. In addition, please check the Fund's top five holdings to know its best picks in 2026.
In its second-quarter 2026 investor letter, Madison Small Cap Fund highlighted stocks like The Baldwin Insurance Group, Inc. (NASDAQ: BWIN ). The Baldwin Insurance Group, Inc. is an insurance brokerage firm that provides risk management, insurance, and advisory services to individuals and businesses. The one-month return of The Baldwin Insurance Group, Inc. (NASDAQ:BWIN) was 0.42% while its shares traded between $15.88 and $32.71 over the last 52 weeks. On October 26, 2026, The Baldwin Insurance Group, Inc. (NASDAQ:BWIN) stock closed at approximately $31.99 per share, with a market capitalization of about $4.49 billion.
Madison Small Cap Fund stated the following regarding The Baldwin Insurance Group, Inc. (NASDAQ:BWIN) in its Q3 2026 investor letter:
"We sold our position in middle-market insurance broker The Baldwin Insurance Group, Inc. (NASDAQ:BWIN)after the takeover announcement by Sequence Holdings (backed by Sequence-affiliated parent entities) alongside the Dell Family Office (DFO) for $32.50 per share, an 8% premium to the prior day's close but an 80% premium to the unaffected closing price. With the shares trading within 2% of the transaction price, we are selling the investment to fund better opportunities elsewhere."
The Baldwin Insurance Group, Inc. (NASDAQ:BWIN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026 . As per our database, 18 hedge fund portfolios held The Baldwin Insurance Group, Inc. (NASDAQ:BWIN) at the end of the second quarter, which was 15 in the previous quarter. While we acknowledge the risk and potential of The Baldwin Insurance Group, Inc. (NASDAQ:BWIN) as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than BWIN that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock .
In another article , we covered The Baldwin Insurance Group, Inc. (NASDAQ:BWIN) and shared our thoughts on the company's upside remains for the shareholders. In addition, please check out our hedge fund investor letters Q3 2026 page for more investor letters from hedge funds and other leading investors.
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This article is originally published at Insider Monkey .
