Madison Small Cap Fund, managed by Madison Funds, released its Q2 2026 investor letter. A copy of the letter can be downloaded here. The small-cap market showed exceptional strength in Q2, largely due to anticipated peace in the Middle East. The Russell 2000 Index began to rally, propelled by Information Technology, Health Care, and Industrials. The Madison Small Cap Fund (Class I) returned 12.7% in the quarter, underperforming the Russell 2000’s 21.5% and Russell 2500’s 20.2%. While strong gains were seen in Info Tech investments, recent investments in underperforming software companies negatively impacted overall performance. Nevertheless, confidence in the long-term potential of these software investments remains high. The firm is optimistic about small caps, noting their recent outperformance over large caps, recovery in certain software sectors, and improvements in some housing stocks toward the end of the second quarter. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.
In its Q2 2026 investor letter, Madison Small Cap Fund highlighted OneSpaWorld Holdings Limited (NASDAQ:OSW). OneSpaWorld Holdings Limited (NASDAQ:OSW) operates health and wellness centers onboard cruise ships and at destination resorts. On July 16, 2026, OneSpaWorld Holdings Limited (NASDAQ:OSW) closed at $26.63 per share. One-month return of OneSpaWorld Holdings Limited (NASDAQ:OSW) was -4.09%, and its shares gained 22.99% over the past 52 weeks. OneSpaWorld Holdings Limited (NASDAQ:OSW) has a market capitalization of $2.7 billion.
Madison Small Cap Fund stated the following regarding OneSpaWorld Holdings Limited (NASDAQ:OSW) in its Q2 2026 investor update:
“We have closed out our investment in consumer discretionary company OneSpaWorld Holdings Limited (NASDAQ:OSW), as we believe the stock has reached our intrinsic value estimate and the risk/reward is no longer favorable. This has been a solid investment since our initial position in 2020.”
OneSpaWorld Holdings Limited (NASDAQ:OSW) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 15 hedge fund portfolios held OneSpaWorld Holdings Limited (NASDAQ:OSW) at the end of the first quarter, compared to 20 in the previous quarter. OneSpaWorld Holdings Limited’s (NASDAQ:OSW) total revenues in Q1 2026 increased 13% to $247.6 million. While we acknowledge the risk and potential of OneSpaWorld Holdings Limited (NASDAQ:OSW) 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 OneSpaWorld Holdings Limited (NASDAQ:OSW) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered OneSpaWorld Holdings Limited (NASDAQ:OSW) and shared the list of top stocks to buy according to Ariel Investments. In addition, please check out our hedge fund investor letters Q2 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.
