Madison Investments, an investment advisor, released its fourth-quarter 2025 investor letter for “Madison Small Cap Fund”. A copy of the letter can be downloaded here. The fourth quarter was challenging for the fund and continued to underperform its benchmark, the Russell 2000 Index. The fund (Class I) returned -0.4%, lagging the benchmark’s 2.2% return. Sector allocation negatively impacted the Fund’s performance this quarter, with healthcare being the weakest sector. The Fund remains optimistic that the speculative market is losing momentum, but cautious, given the saying “markets can stay irrational longer than you can stay solvent”. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its fourth-quarter 2025 investor letter, Madison Small Cap Fund highlighted Encompass Health Corporation (NYSE:EHC). Encompass Health Corporation (NYSE:EHC) is a leading inpatient rehabilitation services provider. On March 13, 2026, Encompass Health Corporation (NYSE:EHC) stock closed at $100.37 per share. One-month return of Encompass Health Corporation (NYSE:EHC) was -8.87%, and its shares gained 2.68% over the past 52 weeks. Encompass Health Corporation (NYSE:EHC) has a market capitalization of $10.099 billion.
Madison Small Cap Fund stated the following regarding Encompass Health Corporation (NYSE:EHC) in its fourth quarter 2025 investor letter:
“From a sector perspective, Healthcare was the worst performing sector, driven by poor performance from our largest investment position, Encompass Health Corporation (NYSE:EHC). Although the fundamentals for EHC are steady, EHC is both a defensive business and a defensive stock in a market that wants offense, a theme we’ll discuss later in depth.”
Encompass Health Corporation (NYSE:EHC) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 50 hedge fund portfolios held Encompass Health Corporation (NYSE:EHC) at the end of the fourth quarter, the same as in the previous quarter. While we acknowledge the risk and potential of Encompass Health Corporation (NYSE:EHC) 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 Encompass Health Corporation (NYSE:EHC) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Encompass Health Corporation (NYSE:EHC) and shared Baron Health Care Fund’s views on the company. In addition, please check out our hedge fund investor letters Q4 2025 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.
