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 Western Alliance Bancorporation (NYSE:WAL). Headquartered in Phoenix, Arizona, Western Alliance Bancorporation (NYSE:WAL) is a regional bank holding company that provides various banking products and related services. On March 12, 2026, Western Alliance Bancorporation (NYSE:WAL) stock closed at $68.12 per share. One-month return of Western Alliance Bancorporation (NYSE:WAL) was -26.91%, and its shares lost 11.81% over the past 52 weeks. Western Alliance Bancorporation (NYSE:WAL) has a market capitalization of $7.497 billion.
Madison Small Cap Fund stated the following regarding Western Alliance Bancorporation (NYSE:WAL) in its fourth quarter 2025 investor letter:
“Western Alliance Bancorporation (NYSE:WAL): We sold our investment in Western Alliance upon finding the company was exposed to the First Brands bankruptcy via a note-on-note lending line to Jeffries/Point Bonita Capital. Our worst-case scenario analysis led us to conclude that there was a small but real probability of needing to raise capital. Furthermore, Utah-based Zions Bancorporation (ZION) disclosed a $50m charge-off on two defaulted commercial and industrial (C&I) loans. The loans totaled $60 million and were found to involve apparent misrepresentations, contractual defaults, and other irregularities. Zions initiated legal action against the borrowers and guarantors after internal reviews. Connected to the same borrower, WAL disclosed that it had a note finance revolving credit facility with Cantor Group V, LLC, which appears to be linked to the same borrower involved in Zions’ troubled loans. WAL filed a lawsuit in August alleging borrower fraud, specifically for failing to provide collateral loans in the first position. Despite the lawsuit, WAL stated that it believes the existing collateral sufficiently covers the obligation. Credit fears could be an overhang on the shares for an extended period. Despite the recent price weakness, this has been a very successful investment for us. Recall, we bought WAL post the Silicon Valley Bank crisis.”
Western Alliance Bancorporation (NYSE:WAL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 36 hedge fund portfolios held Western Alliance Bancorporation (NYSE:WAL) at the end of the fourth quarter, up from 35 in the previous quarter. While we acknowledge the risk and potential of Western Alliance Bancorporation (NYSE:WAL) 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 Western Alliance Bancorporation (NYSE:WAL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Western Alliance Bancorporation (NYSE:WAL) and shared a list of most oversold stocks to buy. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
