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 Q2 2026, Madison Large Cap Fund added Intercontinental Exchange, Inc. (NYSE:ICE), a US-based financial services company that provides technology, data, and market infrastructure to financial institutions, corporations, and government entities. On August 19, 2026, Intercontinental Exchange, Inc. (NYSE:ICE) closed at $157.24 per share, reflecting a market capitalization of $88.27 billion. Intercontinental Exchange, Inc. (NYSE:ICE) posted a one-month return of 9.75%, and its shares lost 12.30% over the past 52 weeks.
Madison Large Cap Fund stated the following regarding Intercontinental Exchange, Inc. (NYSE:ICE) in its Q2 2026 investor letter:
"Intercontinental Exchange, Inc. (NYSE:ICE), an operator of leading financial exchanges and ancillary data products, reported strong results in the quarter, but its stock has been caught up in the broad sell-off in asset-light companies that are perceived as "AI losers".
Intercontinental Exchange (ICE) operates leading financial exchanges and clearing houses, as well as provides data and software to its customers. Founder and CEO Jeff Sprecher has long characterized ICE's overarching strategy as "bringing transparency, efficiency, and standardization to markets with a mission to digitize the analog". We believe ICE should continue to grow revenue and profits at an attractive clip over time and could even see the rate improve if AI trading strategies proliferate, ICE expands into new markets, and the mortgage market picks up after a multiyear slumber. ICE is currently priced at a decade low valuation as investors are concerned about the potential impact of artificial intelligence technologies. We believe this sentiment is misplaced, as ICE's exchanges could actually benefit from AI trading strategies, and its data and software are regulatory-compliant, largely proprietary, and deeply embedded in customer workflows."
Intercontinental Exchange, Inc. (NYSE:ICE) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 86 hedge fund portfolios held Intercontinental Exchange, Inc. (NYSE:ICE) at the end of the first quarter which was 83 in the previous quarter. While we acknowledge the potential of Intercontinental Exchange, Inc. (NYSE:ICE) 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.
In another article, we covered Intercontinental Exchange, Inc. (NYSE:ICE) and shared Pershing Square Holdings' views on the company. In addition, please check out our hedge fund investor letters Q2 2026 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.