Madison Investments, an investment advisor, released its first-quarter 2026 investor letter for the “Madison Mid Cap Fund”. The Madison Mid Cap Fund (Class I) declined 4.28% in the quarter, compared to the Russell Midcap Index’s 1.29% return. A copy of the letter can be downloaded here. The first quarter saw a market shift from tech stocks to companies in the physical economy driven by a better economic outlook and AI disruption fears. This transition favored the ‘HALO trade’ (Heavy Assets, Low Obsolescence), benefiting resilient businesses. In March, geopolitical conflicts and rising commodity prices heightened inflation concerns, leading to strong performance in Energy and Materials sectors, while Utilities also gained. This trend posed challenges for the Madison Mid Cap Fund due to its limited exposure to these sectors. In this environment, the fund identifies opportunities in high-quality, underappreciated businesses and is actively investing in them. Please review the Fund’s top five holdings to gain insights into its key selections for 2026.
In its first-quarter 2026 investor letter, Madison Mid Cap Fund highlighted MKS Inc. (NASDAQ:MKSI) as a leading contributor. MKS Inc. (NASDAQ:MKSI) is a US-based technology company that provides foundational technology solutions to semiconductor manufacturing, electronics and packaging, and specialty industrial applications. On June 29, 2026, MKS Inc. (NASDAQ:MKSI) closed at $416.00 per share, reflecting a market capitalization of $28.09 billion. MKS Inc. (NASDAQ:MKSI) posted a one-month return of 25.54%, and its shares gained 313.03% over the past 52 weeks.
Madison Mid Cap Fund stated the following regarding MKS Inc. (NASDAQ:MKSI) in its Q1 2026 investor letter:
“The top five contributors for the quarter were MKS Inc. (NASDAQ:MKSI), Ross Stores, Teledyne Technologies, PACCAR, and Labcorp. MKS shares advanced on better sales and profits for the fourth quarter as the semi cap industry is seeing improved orders. MKS is benefiting from growing demand for wafer fab equipment as well as chemistry solutions for AI-related applications.
We trimmed our position in MKS and PACCAR. These cyclical companies witnessed sharp appreciation in their shares as investor confidence grew in the strengthening of each of their demand cycles. While we remain confident in the investments, we trimmed the positions back to sizes more commensurate with their higher valuations.”
MKS Inc. (NASDAQ:MKSI) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 71 hedge fund portfolios held MKS Inc. (NASDAQ:MKSI) at the end of the first quarter, up from 52 in the previous quarter. In Q1 2026, MKS Inc. (NASDAQ:MKSI) reported revenue of $1.08 billion, up 4% sequentially and 15% year-over-year. While we acknowledge the risk and potential of MKS Inc. (NASDAQ:MKSI) 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 MKS Inc. (NASDAQ:MKSI) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered MKS Inc. (NASDAQ:MKSI) and shared the list of best photonics stocks to buy. 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.
