Here’s Why The Fund Trimmed Ross Stores (ROST) in Q2

Madison Investments , an investment advisor, released its second-quarter 2026 investor letter for the "Madison Mid Cap Fund". You can download a copy of the letter here . U.S. stock market indices posted their strongest second-quarter performance since 2020, driven largely by enthusiasm for Artificial Intelligence. Nine of the ten largest companies in the Russell Midcap Index benefit directly from the AI data-center boom; one rose 257%, while the others gained between 17% and 136%. A small group of AI-related stocks has powered most of the index's year-to-date returns, reversing the broader market participation seen earlier this year. Although AI will reshape society and the economy, today's apparent winners may not remain so, and current valuations may prove unsustainable. Other risks include unpredictable federal policy, partisan gridlock, expanding deficits, inflation, higher interest rates, stretched consumer finances, and geopolitical volatility. The Class Y of the Fund returned 8.58% in the quarter compared to Russell Midcap's 13.83% return. The firm believes its Mid Cap portfolio combines strong long-term growth prospects with resilience amid potential challenges. Please review the Fund's top five holdings to gain insights into its key selections for 2026.

In its second-quarter 2026 investor letter, Madison Mid Cap Fund highlighted Ross Stores, Inc. (NASDAQ: ROST ). Ross Stores, Inc. (NASDAQ:ROST) is a US-based off-price retail apparel and home fashion store operator. On September 22, 2026, Ross Stores, Inc. (NASDAQ:ROST) closed at $232.51 per share. Over the past month, Ross Stores, Inc. (NASDAQ:ROST) declined 1.59%, but its shares are up 55.60% over the past year. Ross Stores, Inc. (NASDAQ:ROST) has a market capitalization of $74.28 billion, and its stock has traded within a 52-week range of $146.00 to $257.00.

Madison Mid Cap Fund stated the following regarding Ross Stores, Inc. (NASDAQ:ROST) in its Q2 2026 investor letter:

"Discount retailer Ross Stores, Inc. (NASDAQ:ROST) posted one of the strongest same store sales quarters in its history, but shares were flattish in the quarter as the strong risk-on/ momentum rally left behind more defensive businesses. We trimmed our position in Ross Stores (ROST) following strong stock performance. While the business is performing very well, valuation and the position size reached extended levels."

"Discount retailer Ross Stores, Inc. (NASDAQ:ROST) posted one of the strongest same store sales quarters in its history, but shares were flattish in the quarter as the strong risk-on/ momentum rally left behind more defensive businesses.

We trimmed our position in Ross Stores (ROST) following strong stock performance. While the business is performing very well, valuation and the position size reached extended levels."

Ross Stores, Inc. (NASDAQ:ROST) is not on our list of the 40 Most Popular Stocks Among Hedge Funds . According to our database, 71 hedge fund portfolios held Ross Stores, Inc. (NASDAQ:ROST) at the end of the second quarter, down from 83 in the previous quarter. While we acknowledge the potential of Ross Stores, Inc. (NASDAQ:ROST) 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 .