Madison Small Cap Fund, managed by Madison Funds, launched its Q1 2026 investor letter. A duplicate of the letter is accessible to obtain right here. The Madison Small Cap Fund (class I) elevated by 0.10% within the first quarter, trailing behind the Russell 2000 Index (up 0.89%) and the Russell 2500 Index (up 2.04%). Regardless of barely underperforming the benchmark within the quarter, core positions and IT investments confirmed strong efficiency. From a mode perspective, worth shares outperformed development, with the Russell 2000 Worth Index rising ~4.5% and the Russell 2000 Progress Index falling virtually 3%. The outperformance of the worth is pushed by weak point in speculative names aligning with the Fund’s type and choice for high quality, worthwhile franchises. The Fund believes the market volatility, influenced by AI considerations and geopolitical tensions, presents a possible alternative for affected person traders. Please evaluation the Fund’s high 5 holdings to realize insights into their key alternatives for 2026.
In its first-quarter 2026 investor letter, Madison Small Cap Fund Technique highlighted Matador Assets Firm (NYSE:MTDR). Matador Assets Firm (NYSE:MTDR) is a US-based impartial vitality firm engages within the acquisition, exploration, growth, and manufacturing of oil and pure fuel sources. On June 11, 2026, Matador Assets Firm (NYSE:MTDR) closed at $53.62 per share. One-month return of Matador Assets Firm (NYSE:MTDR) was -11.14%, and its shares gained 3.83% over the previous 52 weeks. Matador Assets Firm (NYSE:MTDR) has a market capitalization of $6.66 billion.
Madison Small Cap Fund said the next relating to Matador Assets Firm (NYSE:MTDR) in its Q1 2026 investor letter:
“Matador Assets Firm (NYSE:MTDR) is a Delaware Basin Exploration and Manufacturing (E&P) firm based in 2003. The midstream asset is a three way partnership that strikes oil, fuel, and water out and in of the Permian Basin. Manufacturing has grown 28% each year since its Preliminary Public Providing (IPO). Matador has an entrepreneurial tradition and a excessive degree of worker possession, with its CEO and founder, Joe Foran, personally proudly owning ~4% of the shares. The corporate is an innovator in drilling design and has glorious well-based economics. The corporate additionally has Delaware-focused midstream belongings, which have rising worth as fuel and water cuts enhance within the basin.
MTDR trades at 3.3x enterprise worth to earnings earlier than curiosity, taxes, depreciation, and amortization (EV/EBITDA), and sub-3x if we contemplate the midstream belongings, a reduction to its friends and our comp group. MTDR additionally trades at 9.8x earnings versus 15x for the group. We view this as compelling given the hidden midstream asset and the premium nature of MTDR’s acreage. Our intrinsic worth estimate of $95 is predicated on 5x EV/EBITDA, supported by rising free money circulate yield.”
