Madison Funds: “OMI has an Underappreciated Opportunity to Accelerate Earnings & Cash Flow Growth”

Madison Funds, managed by Madison Asset Management, LLC, released its “Madison Small Cap Fund” third quarter 2022 investor letter – a copy of which can be downloaded here. The Russell 2000 declined 2.2% and the Madison Small Cap Fund (Class Y) underperformed the benchmark. With the exception of Energy and Healthcare, all sectors delivered negative returns. Both sector allocation and stock selection hurt our relative performance. Try to spare some time to check the fund’s top 5 holdings for you to have an idea about their best stock picks this 2022.

In its Q3 2022 investor letter, Madison Small Cap Fund mentioned Owens & Minor, Inc. (NYSE:OMI) and explained its insights for the company. Founded in 1882, Owens & Minor, Inc. (NYSE:OMI) is a Virginia-based global healthcare logistics company with a $1.3 billion market capitalization. Owens & Minor, Inc. (NYSE:OMI) delivered a -58.09% return since the beginning of the year, while its 12-month returns are down by -60.21%. The stock closed at $18.23 per share on November 02, 2022.

Here is what Madison Small Cap Fund has to say about Owens & Minor, Inc. (NYSE:OMI) in its Q3 2022 investor letter:

“Within the Russell 2000, the only sectors that delivered positive returns were Energy and Healthcare (driven by biotech), where we have zero exposure and a significant underweight respectively. Our underweight in healthcare was exacerbated by our investment in Owens and Minor (NYSE:OMI). Hospital volumes remain anemic, a dynamic observed across the industry. Although OMI did slightly reduce guidance, nothing in their results impacts our long-term thesis, as we continue to believe the company has an underappreciated opportunity to accelerate earnings and cash flow growth through a margin expansion program in their Global Products segment. OMI should also continue to benefit from its domestic manufacturing base during the supply chain crisis.

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Our calculations show that Owens & Minor, Inc. (NYSE:OMI) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Owens & Minor, Inc. (NYSE:OMI) was in 15 hedge fund portfolios at the end of the second quarter of 2022, compared to 17 funds in the previous quarter. Owens & Minor, Inc. (NYSE:OMI) delivered a -44.20% return in the past 3 months.

In January 2022, we also shared another hedge fund’s views on Owens & Minor, Inc. (NYSE:OMI) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q3 page.

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Disclosure: None. This article is originally published at Insider Monkey.