Madison Small Cap Fund Evaluates WillScot Holdings Amid Market Challenges

The Madison Small Cap Fund released its third-quarter 2025 investor letter, revealing a challenging period for the fund and its holdings, including WillScot Holdings Corporation (NASDAQ:WSC). The fund’s Class Y shares fell by 1.3% during the quarter, significantly underperforming its benchmarks. This decline was attributed primarily to stock selection within a broadly speculative market, leading to a tough environment for small-cap stocks.

In its analysis, the Madison Small Cap Fund highlighted WillScot Holdings, which specializes in workspace and portable storage solutions. The company, formerly known as WillScot Mobile Mini Holdings Corp., rebranded in July 2024. As of November 20, 2025, shares of WillScot Holdings closed at $15.85, reflecting a sharp decline of 29.46% over the past month and a staggering 56.34% drop in value over the last year. The company currently holds a market capitalization of $2.886 billion.

The fund’s letter noted that underperformance within the Industrials sector, particularly related to WillScot, Carlisle Companies (CSL), and Core and Main (CMN), has been evident. Madison Investments expressed that investing in WillScot has posed significant challenges, primarily due to difficult market conditions. Despite this, the fund has maintained its position, citing attractive unit economics within the mobile storage business. Management has utilized substantial free cash flow (FCF) to repurchase shares, reducing the total from 230 million shares to 182 million shares over the past five years.

In assessing WillScot’s long-term potential, Madison Investments revisited its intrinsic value, estimating it at $46 based on conservative assumptions about market recovery and ongoing share buybacks driven by FCF. The fund acknowledged that its expectations did not align with the market’s current appetite for the stock, but they remain optimistic about the company’s future.

As of the end of the second quarter of 2025, WillScot Holdings was not among the top 30 most popular stocks among hedge funds. However, the number of hedge funds holding the stock increased to 49, from 46 in the previous quarter. The company’s reported revenue for the third quarter of 2025 was $567 million, a decrease of $34 million compared to the same period in 2024.

Madison Investments acknowledged the risks associated with investing in WillScot Holdings but indicated that they believe alternative opportunities, particularly in artificial intelligence (AI) stocks, may offer higher potential returns in a shorter timeframe. For investors seeking promising AI stocks, Madison has suggested exploring options beyond WillScot.

In conclusion, while WillScot Holdings faces significant challenges, Madison Investments continues to believe in the company’s business model and management. The long-term outlook remains hopeful, contingent upon market conditions and the company’s strategic initiatives. For further insights into hedge fund strategies, Madison encourages readers to explore their hedge fund investor letters from Q3 2025.