Madison Small Cap Fund, managed by Madison Funds, released its Q1 2026 investor letter. A copy of the letter is available to download here. The Madison Small Cap Fund (class I) increased by 0.10% in the first quarter, trailing behind the Russell 2000 Index (up 0.89%) and the Russell 2500 Index (up 2.04%). Despite slightly underperforming the benchmark in the quarter, core positions and IT investments showed solid performance. From a style perspective, value stocks outperformed growth, with the Russell 2000 Value Index rising ~4.5% and the Russell 2000 Growth Index falling almost 3%. The outperformance of the value is driven by weakness in speculative names aligning with the Fund’s style and preference for quality, profitable franchises. The Fund believes the market volatility, influenced by AI concerns and geopolitical tensions, presents a potential opportunity for patient investors. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, Madison Small Cap Fund Strategy highlighted ICU Medical, Inc. (NASDAQ:ICUI) as a newly added position. ICU Medical, Inc. (NASDAQ:ICUI) is a leading medical device company specializing in the development of products used in infusion therapy, vascular access, and vital care applications. On June 11, 2026, ICU Medical, Inc. (NASDAQ:ICUI) closed at $142.86 per share. One-month return of ICU Medical, Inc. (NASDAQ:ICUI) was 20.33%, and its shares gained 8.19% over the past 52 weeks. ICU Medical, Inc. (NASDAQ:ICUI) has a market capitalization of $3.57 billion.
Madison Small Cap Fund stated the following regarding ICU Medical, Inc. (NASDAQ:ICUI) in its Q1 2026 investor letter:
“ICU Medical, Inc. (NASDAQ:ICUI) is a medical device company that specializes in infusion therapy, vascular access, and vital care applications. The company’s main business is intravenous delivery devices, and it provides both systems and consumables associated with these pumps. The business is headquartered in San Clemente, California, and has been around for over 40 years.
ICUI’s model is a sticky consumables stream that follows its equipment sale and installation. The industry is consolidated among three players, with ICUI being the smallest. ICUI has gained market share in the pumps business due to quality issues at Becton Dickinson (BDX) and underinvestment at Baxter (BAX). Additionally, the company’s new high-volume pump has more connected features, which we believe will drive retention rates and incremental revenue. This is a boring company with a good market position and excellent cash flow that we view as well-positioned in this volatile market.
We value this opportunity at 12x earnings before interest, taxes, depreciation, and amortization (EBITDA), which blends our intrinsic value estimate to ~$200/share.”
ICU Medical, Inc. (NASDAQ:ICUI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 18 hedge fund portfolios held ICU Medical, Inc. (NASDAQ:ICUI) at the end of the first quarter, compared to 22 in the previous quarter. ICU Medical, Inc. (NASDAQ:ICUI) reported revenue of $530 million in Q1 2026, making a total company growth of 1% on an organic basis or minus 12% reported. While we acknowledge the risk and potential of ICU Medical, Inc. (NASDAQ:ICUI) 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 ICU MEDICAL, INC. (NASDAQ:ICUI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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.
