20 hours ago
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Soumya Eswaran
Fri, June 12, 2026 astatine 9:56 AM CDT 4 min read
Madison Small Cap Fund, managed by Madison Funds, released its Q1 2026 capitalist letter. A transcript of the missive is disposable to download here. The Madison Small Cap Fund (class I) accrued by 0.10% successful the archetypal quarter, trailing down the Russell 2000 Index (up 0.89%) and the Russell 2500 Index (up 2.04%). Despite somewhat underperforming the benchmark successful the quarter, halfway positions and IT investments showed coagulated performance. From a benignant perspective, worth stocks outperformed growth, with the Russell 2000 Value Index rising ~4.5% and the Russell 2000 Growth Index falling astir 3%. The outperformance of the worth is driven by weakness successful speculative names aligning with the Fund's benignant and penchant for quality, profitable franchises. The Fund believes the marketplace volatility, influenced by AI concerns and geopolitical tensions, presents a imaginable accidental for diligent investors. Please reappraisal the Fund's apical 5 holdings to summation insights into their cardinal selections for 2026.
In its first-quarter 2026 capitalist letter, Madison Small Cap Fund Strategy highlighted SiteOne Landscape Supply, Inc. (NYSE:SITE) arsenic a recently added position. SiteOne Landscape Supply, Inc. (NYSE:SITE) is simply a starring distributor of scenery supplies. On June 11, 2026, SiteOne Landscape Supply, Inc. (NYSE:SITE) closed astatine $106.88 per share. One-month instrumentality of SiteOne Landscape Supply, Inc. (NYSE:SITE) was -9.04%, and its shares mislaid 10.01% implicit the past 52 weeks. SiteOne Landscape Supply, Inc. (NYSE:SITE) has a marketplace capitalization of $4.74 billion.
Madison Small Cap Fund stated the pursuing regarding SiteOne Landscape Supply, Inc. (NYSE:SITE) successful its Q1 2026 capitalist letter:
"We initiated a caller concern presumption successful specialty distributor SiteOne Landscape Supply, Inc. (NYSE:SITE), the largest and lone scaled consolidator successful the scenery proviso industry. SiteOne controls 18% of this $26 cardinal manufacture and has been increasing gross astatine a debased double-digit compound yearly maturation complaint (CAGR) implicit the past respective years. SITE has the highest gross margins of immoderate distributor pursuing years of pricing initiatives (600 ground points of betterment since 2014), reflecting its antiaircraft competitory moat and constricted competition. After years of concern successful income and marketing, the institution has a important accidental to grow its operating margin, which should assistance it flooded imaginable cyclical headwinds and thrust net growth. Management has gained credibility successful delivering connected this thesis, with respective quarters of borderline enlargement successful a somewhat depressed end-market environment. The institution has formidable web effect-style moats, including a highly fragmented lawsuit and supplier base. No azygous lawsuit accounts for implicit 2% of sales, and the apical 10 customers relationship for little than 5% of full sales. No different rival has the scope SiteOne has built, making it the astir important intermediary for suppliers and buyers alike. SITE's breadth of offerings and purchasing powerfulness makes them an invaluable assets for section landscapers and suppliers. Management has a coagulated way grounds successful mergers and acquisitions (M&A). Their network-effect moat is amplified done M&A, arsenic standard begets scale. SiteOne is 3x the size of its nearest rival and larger than numbers 2-10 combined. We conservatively estimation the intrinsic worth to beryllium $160."
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