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 Option Care Health, Inc. (NASDAQ:OPCH). Option Care Health, Inc. (NASDAQ:OPCH) is a leading US-based infusion services company that provides IV treatments at home and at alternate sites. On July 17, 2026, Option Care Health, Inc. (NASDAQ:OPCH) closed at $21.74 per share, reflecting a market capitalization of $3.41 billion. Option Care Health, Inc. (NASDAQ:OPCH) posted a one-month return of 2.07%, while its shares lost 25.47% over the past 52 weeks.
Madison Small Cap Fund stated the following regarding Option Care Health, Inc. (NASDAQ:OPCH) in its Q2 2026 investor update:
“Healthcare investments were disappointingly weak in the first quarter as well. The Fund had several investments in Healthcare that struggled in the quarter. Option Care Health, Inc. (NASDAQ:OPCH), our investment in specialty pharmaceuticals, had a tough quarter due to the loss of one of its more profitable specialty drugs. We had been patient with this transition, but the net profitability impact of this drug continued to linger into 2026 and we decided to move on.
We exited our position in OPCH after a difficult quarter marked by reimbursement delays, declines in therapy volume, and biosimilar-related pricing pressures. Although management remains focused on controlling costs, we believe these challenges may take time to resolve, and near-term visibility has become increasingly uncertain.”
Option Care Health, Inc. (NASDAQ:OPCH) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 35 hedge fund portfolios held Option Care Health, Inc. (NASDAQ:OPCH) at the end of the first quarter, up from 33 in the previous quarter. While we acknowledge the risk and potential of Option Care Health, Inc. (NASDAQ:OPCH) 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 Option Care Health, Inc. (NASDAQ:OPCH) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Option Care Health, Inc. (NASDAQ:OPCH) and shared the list of best medical care facilities stocks to buy according to analysts. 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.
