Madison Small Cap Fund, managed by Madison Funds, released its Q1 2026 investor letter. A copy of the letter is available to download here. The Madison Small Cap Fund (class I) increased by 0.10% in the first quarter, trailing behind the Russell 2000 Index (up 0.89%) and the Russell 2500 Index (up 2.04%). Despite slightly underperforming the benchmark in the quarter, core positions and IT investments showed solid performance. From a style perspective, value stocks outperformed growth, with the Russell 2000 Value Index rising ~4.5% and the Russell 2000 Growth Index falling almost 3%. The outperformance of the value is driven by weakness in speculative names aligning with the Fund’s style and preference for quality, profitable franchises. The Fund believes the market volatility, influenced by AI concerns and geopolitical tensions, presents a potential opportunity for patient investors. Please review the Fund’s top five holdings to gain insights into their key selections for 2026.
In its first-quarter 2026 investor letter, Madison Small Cap Fund Strategy highlighted Viavi Solutions Inc. (NASDAQ:VIAV). Viavi Solutions Inc. (NASDAQ:VIAV) is a leading global technology company that delivers network test, monitoring, and assurance solutions. On June 11, 2026, Viavi Solutions Inc. (NASDAQ:VIAV) closed at $50.24 per share. One-month return of Viavi Solutions Inc. (NASDAQ:VIAV) was 5.21%, and its shares gained 489.43% over the past 52 weeks. Viavi Solutions Inc. (NASDAQ:VIAV) has a market capitalization of $12.39 billion.
Madison Small Cap Fund stated the following regarding Viavi Solutions Inc. (NASDAQ:VIAV) in its Q1 2026 investor letter:
“From an attribution perspective, our Technology investments were the strongest outperformers in the quarter, driven by solid performance in our semiconductor names, despite poor performance from our software investments, mostly due to AI disruption speculation. Viavi Solutions Inc. (NASDAQ:VIAV) was our strongest stock, driven by the recent acquisition of Spirent and accelerating demand from semiconductor and memory companies. We view Viavi as a key player in the AI data center ecosystem, especially since NVIDIA specifically calls for Viavi Test gear in its AI reference architecture. We think the company’s long-term opportunity is expanding.”
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, 44 hedge fund portfolios held Viavi Solutions Inc. (NASDAQ:VIAV) at the end of the first quarter, up from 42 in the previous quarter. 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 the list of hot tech stocks to buy according to analysts. 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.
