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 Workiva Inc. (NYSE:WK). Workiva Inc. (NYSE:WK) is a software company that provides cloud-based reporting solutions for financial reporting, compliance, and risk management. On June 11, 2026, Workiva Inc. (NYSE:WK) closed at $49.13 per share. One-month return of Workiva Inc. (NYSE:WK) was 3.65%, and its shares lost 25.25% over the past 52 weeks. Workiva Inc. (NYSE:WK) has a market capitalization of $2.76 billion.
Madison Small Cap Fund stated the following regarding Workiva Inc. (NYSE:WK) in its Q1 2026 investor letter:
“We continue to see opportunities in software and made several new investments as the massive selloff led to attractive valuations. We are focused on strong franchises in critical applications that we believe are much less likely to be disrupted by AI native competition. Investments like Workiva Inc. (NYSE:WK), which provides compliance and regulatory software for enterprises, are much more resilient businesses than the market fears. Our conversations with WK customers give us confidence that they do not intend on ripping and replacing such a deeply integrated and important system of record any time soon, if ever.”
Workiva Inc. (NYSE:WK) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 42 hedge fund portfolios held Workiva Inc. (NYSE:WK) at the end of the first quarter, the same as in the previous quarter. In Q1 2026, Workiva Inc. (NYSE:WK) reported revenue of $247 million, an increase of 20% year-over-year. While we acknowledge the risk and potential of Workiva Inc. (NYSE:WK) 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 WORKIVA INC. (NYSE:WK) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Workiva Inc. (NYSE:WK) and shared the list of best high-return technology stocks to buy. 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.
