Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTSoumya EswaranMon, August 24, 2026 at 1:14 PM GMT+2 3 min readMadison 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 Honeywell Aerospace Inc. (NASDAQ:HONA) as a new holding. Honeywell Aerospace Inc. (NASDAQ:HONA), spun off from Honeywell International in June 2026, manufactures and supplies aircraft components, avionics, engines, and systems. On August 21, 2026, Honeywell Aerospace Inc. (NASDAQ:HONA) closed at $164.73 per share, reflecting a market capitalization of $52.21 billion. Honeywell Aerospace Inc. (NASDAQ:HONA) posted a one‑month return of ‑21.87%.Madison Large Cap Fund stated the following regarding Honeywell Aerospace Inc. (NASDAQ:HONA) in its Q2 2026 investor letter:"Honeywell Aerospace Inc. (NASDAQ:HONA) is a leading aerospace and defense supplier, supporting OEM, government, and aircraft operator customers. The company's products sit on a wide variety of aerospace programs with approximately 90% of in-service aircraft today having Honeywell Aerospace content. The separation from Honeywell International should enhance an already high-quality business as management compensation and capital allocation will be better tailored to the specific needs of the business. We believe the combination of attractive growth outlook, improved incentives, and optimized capital allocation is underappreciated."Is RBC Bearings Incorporated (RBC) the Top Stock to Buy According to Durable Capital Partners?Honeywell Aerospace Inc. (NASDAQ:HONA) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. While we acknowledge the potential of Honeywell Aerospace Inc. (NASDAQ:HONA) 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.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info