Madison Investments, an investment advisor, released its first-quarter 2026 investor letter for the “Madison Mid Cap Fund”. The Madison Mid Cap Fund (Class I) declined 4.28% in the quarter, compared to the Russell Midcap Index’s 1.29% return. A copy of the letter can be downloaded here. The first quarter saw a market shift from tech stocks to companies in the physical economy driven by a better economic outlook and AI disruption fears. This transition favored the ‘HALO trade’ (Heavy Assets, Low Obsolescence), benefiting resilient businesses. In March, geopolitical conflicts and rising commodity prices heightened inflation concerns, leading to strong performance in Energy and Materials sectors, while Utilities also gained. This trend posed challenges for the Madison Mid Cap Fund due to its limited exposure to these sectors. In this environment, the fund identifies opportunities in high-quality, underappreciated businesses and is actively investing in them. Please review the Fund’s top five holdings to gain insights into its key selections for 2026.
In its first-quarter 2026 investor letter, Madison Mid Cap Fund highlighted Tyler Technologies, Inc. (NYSE:TYL). Tyler Technologies, Inc. (NYSE:TYL) is a leading integrated software and technology solutions provider for the public sector in the United States. On June 29, 2026, Tyler Technologies, Inc. (NYSE:TYL) closed at $290.75 per share. One-month return of Tyler Technologies, Inc. (NYSE:TYL) was -7.27%, and its shares lost 50.72% over the past 52 weeks. Tyler Technologies, Inc. (NYSE:TYL) has a market capitalization of $11.96 billion.
Madison Mid Cap Fund stated the following regarding Tyler Technologies, Inc. (NYSE:TYL) in its Q1 2026 investor letter:
“Amid all the concern regarding the potential for AI to disrupt software companies, we opportunistically added two new software investments to the portfolio, both companies with unique characteristics that we believe will prove to be resilient to AI disruption, Tyler Technologies, Inc. (NYSE:TYL) and Bentley Systems. Tyler Technologies is the leading maker of software for municipalities and states. Municipalities and states are laggards in spending on technology; many of them are on decades-old systems that are in dire need of upgrades. At the same time, citizens are increasingly demanding more tech-friendly interfaces with their governments. These two forces provide Tyler with a long runway for sales growth. Tyler has a strong track record of revenue growth and software implementations, and should be in pole position to continue winning contracts from municipal governments, who tend to be risk-averse, with a tendency to go with proven vendors with time-tested technologies.”
Tyler Technologies, Inc. (NYSE:TYL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 42 hedge fund portfolios held Tyler Technologies, Inc. (NYSE:TYL) at the end of the first quarter, up from 40 in the previous quarter. While we acknowledge the risk and potential of Tyler Technologies, Inc. (NYSE:TYL) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Tyler Technologies, Inc. (NYSE:TYL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Tyler Technologies, Inc. (NYSE:TYL) and shared NZS Capital’s views on the company. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
