Madison Investments, an investment advisor, released its “Madison Small Cap Fund” fourth-quarter 2024 investor letter. A copy of the letter can be downloaded here. The Madison Small Cap Fund completed a great year in the fourth quarter. For the fourth quarter and the entire year, the fund generated strong absolute and relative returns. Growth continued to beat value, while large caps continued to outperform small caps on average. In the fourth quarter, the fund (class I) returned 4.04% outperforming a (0.33%) return for the Russell 2000 Index and a (0.62%) return for the Russell 2500 Index. The outperformance was driven by stock selection and favorable allocation. In addition, looking at the entire year, the performance exceeded benchmarks by an even greater margin. Despite the Russell 2000 Index’s 11.55% annual gain, the fund outpaced the benchmark by a whopping 900 basis points, reporting a 22% overall return. Although advantageous sector allocation also helped, stock selection accounted for the vast bulk of the outperformance. In addition, you can check the fund’s top 5 holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Madison Small Cap Fund emphasized stocks such as V.F. Corporation (NYSE:VFC). Headquartered in Denver, Colorado, V.F. Corporation (NYSE:VFC) designs, manufactures, and distributes branded lifestyle apparel, footwear, and related products. The one-month return of V.F. Corporation (NYSE:VFC) was 8.11%, and its shares gained 53.69% of their value over the last 52 weeks. On February 14, 2025, V.F. Corporation (NYSE:VFC) stock closed at $25.59 per share with a market capitalization of $9.97 billion.
Madison Small Cap Fund stated the following regarding V.F. Corporation (NYSE:VFC) in its Q4 2024 investor letter:
“We initiated a new investment position in V.F. Corporation (NYSE:VFC) (~8$b market cap). Formerly known as Vanity Fair, VF is the owner of a portfolio of apparel and footwear brands, namely Vans, The North Face, and Timberlands, which make up the lion’s share of the revenues. VFC is in a special situation with relatively new management, executing a turnaround strategy that we believe is value-maximizing and very shareholder-friendly. The company recently sold one of its portfolio brands, Supreme, for $1.5b and used the proceeds to pay down debt. They’ve reduced costs across the portfolio, including shrinking the Van’s retail business.
Although margins have improved from the recent trough as a result of these actions, there is ample room for expansion, and we believe the portfolio can be further rationalized. We would not be surprised if Timberland gets sold to further de-lever the balance sheet, leaving the company focused on two strong brands that have, we believe, room to grow mostly in international markets but also domestically. We further believe a fully rationalized portfolio with a cleaner balance sheet alongside a recovery in the Vans business could improve the intrinsic value, which we currently estimate to be $28 per share.”
A model walking down the runway wearing a fashionable and performance-based apparel designed by the company.
V.F. Corporation (NYSE:VFC) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 30 hedge fund portfolios held V.F. Corporation (NYSE:VFC) at the end of the third quarter which was 30 in the previous quarter. V.F. Corporation’s (NYSE:VFC) revenue in fiscal Q3 2025 increased by 2% over the previous year’s quarter, marking the firm’s fourth consecutive quarter of growth. While we acknowledge the potential of V.F. Corporation (NYSE:VFC) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article we discussed V.F. Corporation (NYSE:VFC) and shared the list of footwear apparel stocks affected by China tariffs. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.