Madison Investments, an investment advisor, released its fourth-quarter 2025 investor letter for “Madison Mid Cap Fund”. A copy of the letter can be downloaded here. The Russell Midcap Index ended an incredibly successful three-year run with a full-year return of 10.6%, amounting to an annual increase of more than 14%. The market favored more volatile and speculative companies in 2025. This market environment poses challenges for the Madison Mid Cap portfolio, which is focused on high-quality, profitable businesses. Historically, this focus has supported long-term investment success, and the firm remains committed to it, is optimistic about the opportunities this year has presented, and has actively capitalized on them. Against this backdrop, the Fund decreased 1.2% in Q4 2025, lagging the Russell Midcap Index’s 0.2% increase. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Madison Mid Cap Fund highlighted stocks like A. O. Smith Corporation (NYSE:AOS). The Fund established a position in A. O. Smith Corporation (NYSE:AOS), a leading manufacturer of water heaters, boilers, and water treatment products, during the quarter. On March 10, 2026, A. O. Smith Corporation (NYSE:AOS) stock closed at $69.82 per share. One-month return of A. O. Smith Corporation (NYSE:AOS)) was -12.96%, and its shares gained 6.37% over the past 52 weeks. A. O. Smith Corporation (NYSE:AOS)) has a market capitalization of $9.655 billion.
Madison Mid Cap Fund stated the following regarding A. O. Smith Corporation (NYSE:AOS) in its fourth quarter 2025 investor letter:
“We added four new investments to the portfolio: Bio-Techne, ServiceTitan, A. O. Smith Corporation (NYSE:AOS), and MSA Safety. A.O. Smith designs and manufactures water heaters, boilers, and water treatment products. Around 80-85% of water heater demand is from replacement units, providing for a more consistent demand profile. A.O. Smith is the market share leader, operating within a rational oligopoly that drives high returns on invested capital. The company is well positioned to benefit from upcoming energy regulations as well as improved capital deployment from new CEO Steve Shafer. The stock traded down to an appealing valuation following weakening results in its China business as well as general negative sentiment on anything housing-related.”
A. O. Smith Corporation (NYSE:AOS) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 34 hedge fund portfolios held A. O. Smith Corporation (NYSE:AOS) at the end of the fourth quarter, down from 46 in the previous quarter. While we acknowledge the potential of A. O. Smith Corporation (NYSE:AOS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
