Here’s What Drove Madison Small Cap Fund to Invest in Hexcel Corp. (HXL)

2 days ago 5

Soumya Eswaran

Fri, November 21, 2025 astatine 7:56 AM CST 3 min read

Madison Investments, an concern advisor, released its “Madison Small Cap Fund” third-quarter 2025 capitalist letter. A transcript of the missive tin beryllium downloaded here. The 3rd 4th was hard for the Small Cap Fund. The small-cap index’s show was broad-based. The Madison Small Cap Fund (class Y) was down 1.3% successful the quarter, importantly underperforming the benchmarks. The underperformance was driven by banal enactment and exacerbated by a precise speculative market. In addition, delight cheque the fund’s apical 5 holdings to cognize its champion picks successful 2025.

In its third-quarter 2025 capitalist letter, Madison Small Cap Fund highlighted stocks specified arsenic Hexcel Corporation (NYSE:HXL). Hexcel Corporation (NYSE:HXL) manufactures c fibers, structural reinforcements, honeycomb structures, resins, and composite materials and parts for commercialized aerospace, abstraction and defense, and concern applications. The one-month instrumentality of Hexcel Corporation (NYSE:HXL) was -3.08%, and its shares gained 15.30% of their worth implicit the past 52 weeks. On November 20, 2025, Hexcel Corporation (NYSE:HXL) banal closed astatine $70.55 per share, with a marketplace capitalization of $5.616 billion.

Madison Small Cap Fund stated the pursuing regarding Hexcel Corporation (NYSE:HXL) successful its 3rd 4th 2025 capitalist letter:

"The tiny headdress squad initiated a caller concern presumption successful Hexcel Corporation (NYSE:HXL). Hexcel is simply a planetary person successful precocious composite materials, specializing successful the accumulation of c fibre reinforcements, resin systems, and honeycomb structures. These materials are captious for lightweight, high-performance applications, peculiarly successful the commercialized aerospace, space, and defence sectors. Hexcel’s products are utilized successful craft frames, wings, engines, and different structural components, offering spot and durability portion importantly reducing weight. Major clients see aerospace giants similar Airbus and Boeing. We similar the duopoly marketplace operation and heavy moats of Hexcel’s business. The rhythm has been successful a prolonged downtrend owed to the COVID proviso concatenation shocks, creating bottlenecks successful engines and the struggles of Boeing and Spirit Aerosystems. We judge these headwinds are present mostly down us. The competitory moats successful this concern are significant. Capital strength is comparatively high, portion incumbency and vertical integration supply a immense competitory advantage. Certification successful helping and fuselage requires monolithic regulatory approval, which leads to adjacent higher switching costs. Furthermore, the manufacture has a benign competitory structure, with Japanese steadfast Toray being the lone different direct, scaled composite worldly competitor, having a combined stock successful helping and fuselage that approaches 90% and holding sole-sourced positions with archetypal instrumentality manufacturers (OEMs). We judge the intrinsic worth for this franchise is $85."