Madison Investments, an investment advisor, released its second-quarter 2026 investor letter for the "Madison Large Cap Fund". A copy of the letter can be downloaded here. In the second quarter, U.S. stock market indices achieved their best performance since 2020, driven largely by a narrow group of Artificial Intelligence-related stocks. As in the pandemic's early days, investors are fixated on who will benefit from AI, reminiscent of the late 1990s internet bubble. Against this backdrop, The Madison Large Cap Fund (class I) returned 8.4% in the second quarter of 2026, compared to a 15.2% increase in the S&P 500 Index. The current market's extreme narrowness is concerning, and history suggests this won't persist. While AI is reshaping society and the economy, today's winners may not remain so, and booms could lead to busts. Additionally, factors such as a volatile federal administration, growing budget deficits, inflation, high interest rates, and strained consumer finances will significantly impact the economy and stock market in the future. Additionally, reviewing the Fund's top five holdings could help identify its best picks for 2026.
In its Q2 2026 investor letter, Madison Large Cap Fund highlighted Copart, Inc. (NASDAQ:CPRT). Copart, Inc. (NASDAQ:CPRT) is an online auction and vehicle remarketing services company. On August 19, 2026, Copart, Inc. (NASDAQ:CPRT) closed at $33.85 per share. One-month return of Copart, Inc. (NASDAQ:CPRT) was 24.10%, and its shares lost 29.21% over the past 52 weeks. Copart, Inc. (NASDAQ:CPRT) has a market capitalization of $31.26 billion.
Madison Large Cap Fund stated the following regarding Copart, Inc. (NASDAQ:CPRT) in its Q2 2026 investor letter:
"Volume growth at Copart, Inc. (NASDAQ:CPRT), which manages salvage vehicle auctions, continues to be weak due to more under-and-uninsured auto drivers and shifting market share amongst insurance carriers. While recent performance has been frustrating, Copart's earnings have grown at a healthy clip over the past few years, and its competitive position remains strong. The company also announced that Executive Chairman Jay Adair, who previously served as CEO for many years, will return to the role. We view this as a positive development. Jay was instrumental in building Copart over the past 30+ years, and his substantial ownership stake keeps him strongly aligned with shareholders."
Copart, Inc. (NASDAQ:CPRT) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 57 hedge fund portfolios held Copart, Inc. (NASDAQ:CPRT) at the end of the first quarter, compared to 68 in the previous quarter. In Q3 FY 2026, Copart, Inc.'s (NASDAQ:CPRT) consolidated revenue grew to $1.24 billion, up 2.1% from last year fueled by robust service and purchase vehicle sales. While we acknowledge the potential of Copart, Inc. (NASDAQ:CPRT) as an investment, we believe certain AI stocks offer greater upside potential and carry less do