Madison Investments, an investment advisor, recently shared its fourth-quarter 2025 investor letter for the Madison Small Cap Fund. The letter, which can be accessed here, reflects on a challenging quarter for the fund, as it continued to underperform its benchmark, the Russell 2000 Index. The Class I of the fund returned -0.4%, falling short of the benchmark’s 2.2% return. The performance was mainly impacted by sector allocation, with healthcare being the weakest sector.
Despite the setbacks, Madison Investments remains cautiously optimistic about the market’s speculative momentum. The fund acknowledges the potential risks involved, as markets can often remain irrational for longer periods than expected. For investors looking to assess the fund’s top picks for 2025, examining the top 5 holdings can provide valuable insights.
One of the highlighted stocks in the fourth-quarter 2025 investor letter is Primo Brands Corporation (NYSE:PRMB). Primo Brands Corporation is a prominent North American beverage company. As of March 13, 2026, the stock closed at $20.76 per share. Over the past month, Primo Brands Corporation has delivered a solid 10.66% return, although its shares have seen a decline of 35.69% over the past twelve months. With a market capitalization of $7.591 billion, Primo Brands Corporation remains a significant player in the industry.
Madison Small Cap Fund’s commentary on Primo Brands Corporation in its latest investor letter sheds light on the company’s journey. The fund initially acquired PRMB in 2020, attracted by its strong presence in the water delivery business. Primo Brands Corporation is known for its delivery of 5-gallon bottled water to consumers and small businesses through subscriptions or direct exchanges. Additionally, the company owns popular consumer retail brands like Mountain Valley and Saratoga Springs.
In 2022, Primo Brands Corporation was acquired by Blue Triton Holdings, previously known as Nestle Water. The merger resulted in the formation of North America’s largest water delivery and consumer retail franchise, with potential cost savings of $200 million. The company witnessed substantial growth in 2023 and 2024, driven by expanding margins and steady revenue growth. However, in 2025, operational challenges arose due to the accelerated integration process and logistical issues, including a tornado damaging one of their bottling plants in Texas.
Despite these setbacks, the new management swiftly addressed the issues, but the stock experienced a significant decline, erasing gains from the previous two years. The fund remains optimistic about Primo Brands Corporation’s long-term prospects, highlighting the company’s resilience in overcoming challenges. The narrative surrounding Primo Brands Corporation serves as a reminder of the unpredictable nature of the market and the importance of prudent risk management.
