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 stocks like Viavi Solutions Inc. (NASDAQ:VIAV). Viavi Solutions Inc. (NASDAQ:VIAV) is a leading provider of network test, monitoring, and assurance solutions for telecommunications, cloud, enterprises, first responders, military, aerospace, and critical infrastructures. On March 12, 2026, Viavi Solutions Inc. (NASDAQ:VIAV) stock closed at $29.76 per share. One-month return of Viavi Solutions Inc. (NASDAQ:VIAV) was 13.20%, and its shares gained 172.03% over the past 52 weeks. Viavi Solutions Inc. (NASDAQ:VIAV) has a market capitalization of $6.89 billion.
Madison Small Cap Fund stated the following regarding Viavi Solutions Inc. (NASDAQ:VIAV) in its fourth quarter 2025 investor letter:
“Small cap initiated a new investment in the test and measurement company Viavi Solutions Inc. (NASDAQ:VIAV). Viavi’s test and measurement solutions provide network test, monitoring, and assurance solutions for telecommunications, cloud, enterprise, aerospace, defense, and industrial markets. The company operates through two primary segments: Network and Service Enablement (NSE): Offers test and measurement instruments, software, and services for wireless, wireline, cloud, data center, and military markets. Optical Security and Performance Products (OSP): Provides optical coatings and components used in anticounterfeiting, 3D sensing, automotive, and industrial applications. Test and measurement is a very sticky business with substantial moats, making strategic mergers and acquisitions an important driver of growth and moat expansion. In early 2024, Viavi Solutions made an initial $1.3 billion bid to acquire Spirent Communications, a UK-based provider of network testing and assurance solutions. Shortly after, Keysight Technologies countered with a higher bid of $1.46 billion, which Spirent accepted. The U.S. Department of Justice (DOJ) raised antitrust concerns, noting that Keysight and Spirent together controlled 85% of the high-speed Ethernet testing market, 60% of the network security testing market, and 50% of the radio frequency channel emulation market. To resolve these concerns, the DOJ required Keysight to divest its overlapping business units to Viavi under a consent decree. This deal closed on October 16, and we believe the Spirent assets will strengthen Viavi’s position in the data center ecosystem and accelerate growth and margin expansion. We believe the market does not yet fully appreciate Viavi’s vast opportunity in the data center market. We estimate the stock’s intrinsic value to be $30.”
Viavi Solutions Inc. (NASDAQ:VIAV) 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 Viavi Solutions Inc. (NASDAQ:VIAV) at the end of the fourth quarter, up from 28 in the previous quarter. In the second quarter of fiscal 2026 Viavi Solutions Inc. (NASDAQ:VIAV) reported net revenue of $369.3, marking an increase of 36.4% year-over year. While we acknowledge the risk and potential of Viavi Solutions Inc. (NASDAQ:VIAV) 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 Viavi Solutions Inc. (NASDAQ:VIAV) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Viavi Solutions Inc. (NASDAQ:VIAV) and shared a list of best communication equipment stocks to buy according to hedge funds. 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.
