Madison Investments, an investment advisor, released its “Madison Small Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The second quarter started as a continuation of the first quarter. As the liberation day tariffs were catastrophic, sending both equities and treasuries steeply lower. Later, the administration set a pause in the tariff implementation, which led equities to rebound, supported by better-than-expected macroeconomic data, particularly regarding inflation and employment. The Russell 2000 Index is up 8.5% for the quarter and down only 1.79% year-to-date. The Madison Small Cap Fund (class Y) returned 4.42% in the quarter, lagging the Russell 2000 and Russell 2500. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its second-quarter 2025 investor letter, Madison Small Cap Fund highlighted stocks such as Advanced Drainage Systems, Inc. (NYSE:WMS). Advanced Drainage Systems, Inc. (NYSE:WMS) is a manufacturer and marketer of thermoplastic corrugated pipes and related water management products. The one-month return of Advanced Drainage Systems, Inc. (NYSE:WMS) was 0.12%, and its shares lost 9.63% of their value over the last 52 weeks. On September 17, 2025, Advanced Drainage Systems, Inc. (NYSE:WMS) stock closed at $140.61 per share, with a market capitalization of $10.933 billion.
Madison Small Cap Fund stated the following regarding Advanced Drainage Systems, Inc. (NYSE:WMS) in its second quarter 2025 investor letter:
“Advanced Drainage Systems, Inc. (NYSE:WMS) is the leading manufacturer of high-performance thermoplastic corrugated pipe. The company provides a comprehensive suite of water management products and drainage solutions for use in the underground construction and infrastructure markets. WMS has established a dominant position in the highly fragmented stormwater management subsector and is 10x the size of its nearest competitor. Their products are utilized across various end markets, including non residential, residential, agricultural, and infrastructure applications. As storms increase in frequency and intensity, WMS’s solutions help prevent floods, recharge aquifers, improve food security, and mitigate water scarcity. We believe WMS is a durable, high-quality franchise with substantial moats, including: unparalleled scale, national distribution footprint, and it is North America’s largest materials recycling facility, providing them with overwhelming cost advantages over traditional concrete pipe.
WMS has a well-regarded management team with a solid track record in mergers and acquisitions. Depressed end markets have provided an attractive entry point. We believe the intrinsic value of the stock is $180,”
Advanced Drainage Systems, Inc. (NYSE:WMS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 36 hedge fund portfolios held Advanced Drainage Systems, Inc. (NYSE:WMS) at the end of the second quarter, compared to 33 in the previous quarter. In the fiscal first quarter of 2026, Advanced Drainage Systems, Inc.’s (NYSE:WMS) revenue increased 2% to $830 million despite challenging end market demand. While we acknowledge the risk and potential of Advanced Drainage Systems, Inc. (NYSE:WMS) 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 Advanced Drainage Systems, Inc. (NYSE:WMS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Advanced Drainage Systems, Inc. (NYSE:WMS) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q2 2025 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.
