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 stocks like Vericel Corporation (NASDAQ:VCEL). Vericel Corporation (NASDAQ:VCEL) is a biotechnology company focuses on research, development and manufacture of therapies and specialty biologic products for cartilage repair and burn care. On March 12, 2026, Vericel Corporation (NASDAQ:VCEL) stock closed at $32.11 per share. One-month return of Vericel Corporation (NASDAQ:VCEL) was -11.40%, and its shares lost 29.79% over the past 52 weeks. Vericel Corporation (NASDAQ:VCEL) has a market capitalization of $1.617 billion.
Madison Small Cap Fund stated the following regarding Vericel Corporation (NASDAQ:VCEL) in its fourth quarter 2025 investor letter:
“Vericel Corporation (NASDAQ:VCEL) is a medical device company specializing in cartilage repair and burn care. VCEL’s autologous cartilage repair product is differentiated and value-added for younger patients with knee cartilage defects of 2-4 cm. It is a superior procedure to microfracture or other cartilage patch products, as it uses patients’ own cartilage cells, which are cultured into a custom patch that differentiates into full-thickness cartilage. This is a niche application, but adoption is growing among sports medicine and orthopedic physicians. The company’s burn care solution is also well-regarded in the market and is growing well. Sales at VCEL have grown at a mid-teens rate over the last five years. We think sales can accelerate slightly from this level with the next-generation product recently approved by the FDA. The company recently swung to profitability, and we see margin expansion as revenue ramps. Our intrinsic value estimate is $50 per share.”
Vericel Corporation (NASDAQ:VCEL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 57 hedge fund portfolios held Vericel Corporation (NASDAQ:VCEL) at the end of the fourth quarter, up from 56 in the previous quarter. While we acknowledge the risk and potential of Vericel Corporation (NASDAQ:VCEL) 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 Vericel Corporation (NASDAQ:VCEL) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Vericel Corporation (NASDAQ:VCEL) and shared a list of best small-cap growth stocks to buy according to hedge funds. 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.
