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 GitLab Inc. (NASDAQ:GTLB). GitLab Inc. (NASDAQ:GTLB) develops software for the software development lifecycle that covers DevSecOps lifecycle stages. On March 12, 2026, GitLab Inc. (NASDAQ:GTLB) stock closed at $22.82 per share. One-month return of GitLab Inc. (NASDAQ:GTLB) was -22.77%, and its shares lost 56.18% over the past 52 weeks. GitLab Inc. (NASDAQ:GTLB) has a market capitalization of $3.881 billion.
Madison Small Cap Fund stated the following regarding GitLab Inc. (NASDAQ:GTLB) in its fourth quarter 2025 investor letter:
“We initiated a new investment position in GitLab Inc. (NASDAQ:GTLB), a Dev/Sec/Ops (development/ security/operations) software platform vendor that helps software developers plan, build, and monitor code for new and existing applications. Gitlab’s strategic software tools help developers manage the entire software development pipeline: From the planning stage to the building, deployment, and monitoring stage, while keeping proprietary software secure through the entire development lifecycle. The company has attractive mid-teens operating margins, a pristine balance sheet, and is growing at a double-digit rate in a very large and growing market. GitLab coexists in an attractive duopoly with Microsoft’s GitHub platform. We have invested alongside the recently appointed CEO, Bill Staples, in the past and believe he’s an excellent steward of capital. The stock has been under severe pressure for some time, largely due to the belief that AI-powered “Vibe Coding” software companies will displace GTLB solutions. We fundamentally reject this thesis and believe that as software development becomes easier and more productive, more code will be generated, increasing the need for planning, development, and monitoring tools like GitLab’s, and will eventually make GitLab more, not less, valuable. We estimate GTLB’s intrinsic value is $75 per share and that current prices reflect an attractive investment opportunity.”
GitLab Inc. (NASDAQ:GTLB) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 59 hedge fund portfolios held GitLab Inc. (NASDAQ:GTLB) at the end of the fourth quarter, up from 51 in the previous quarter. While we acknowledge the risk and potential of GitLab Inc. (NASDAQ:GTLB) 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 GitLab Inc. (NASDAQ:GTLB) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered GitLab Inc. (NASDAQ:GTLB) and shared a list of best low-priced AI 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.
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Disclosure: None. This article is originally published at Insider Monkey.
