Artisan Mid Cap Value Fund: CDW Corporation (CDW) has Solid Business Economics

Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund’s Investor Class fund ARTQX returned 0.26%, Advisor Class fund APDQX posted a return of 0.26%, and Institutional Class fund APHQX returned 0.33%, compared to a 5.35% return for the Russell Midcap Value Index. Equity markets experienced heightened volatility followed by the announcement and subsequent pause of the so-called “Liberation Day” tariffs. The portfolio underperformed in the quarter due to the market’s preference for growth and the outperformance of more cyclical sectors and industries. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Artisan Mid Cap Value Fund highlighted stocks such as CDW Corporation (NASDAQ:CDW). CDW Corporation (NASDAQ:CDW) is an information technology (IT) solutions provider. The one-month return of CDW Corporation (NASDAQ:CDW) was -4.88%, and its shares lost 25.66% of their value over the last 52 weeks. On August 28, 2025, CDW Corporation (NASDAQ:CDW) stock closed at $165.87 per share, with a market capitalization of $21.739 billion.

Artisan Mid Cap Value Fund stated the following regarding CDW Corporation (NASDAQ:CDW) in its second quarter 2025 investor letter:

"There’s an oft-repeated phrase by investors, “You can have good news, or you can have good prices, but you can’t have both.” While falling markets can be uncomfortable while they are occurring, we’ve seen time and time again that these periods can present favorable buying opportunities. In Q2, Liberation Day tariffs were the metaphorical bad news that created good prices. In fact, the steep drop in the stock market presented us with an opportunity to be much more active than we had been for some time. In April, we made four new purchases, which compares to just one in the entire Q1. In addition to adding Pinterest and Ferguson in April, we also initiated new positions in Align Technology and CDW Corporation (NASDAQ:CDW).

CDW is a value-added reseller (VAR) of information technology solutions. IT resellers pulled back with the broader sector in the first few months of the year. Additionally, there have been fears that growth in cloud computing will harm the VARs’ higher margin networking business. Disintermediation has been a concern with these businesses throughout their lives due to ongoing technological change. Historically the change to digital software from physical delivery sparked concern, followed by the growth of software as a service, and today, the risk of cloud vendors going direct is front and center. Disintermediation is likely a bigger risk in the enterprise market. Small and medium businesses (SMBs), however, generally do not have the resources to go out and vet the universe of IT products and services, and therefore they rely on VARs for that and for implementation. The vendors also generally do not seem to be interested in building out sales support to go out and sell their products directly to SMBs. CDW has solid business economics. It’s not capital intensive and generates free cash flow. IT solutions are cyclical, but CDW has been able to grow at a faster rate than overall IT spend as the channel has taken share from direct sales over time. Over the mid- to long-term, we believe CDW is positioned to continue consolidating share of the highly fragmented VAR market, which should enable mid-single-digit to high-single-digit percentage growth on a recurring basis."

CDW Corporation (NASDAQ:CDW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held CDW Corporation (NASDAQ:CDW) at the end of the second quarter, which was 44 in the previous quarter. In the second quarter of 2025, CDW Corporation (NASDAQ:CDW) reported consolidated net sales of $6 billion, up 10% compared to Q2 2024. While we acknowledge the potential of CDW Corporation (NASDAQ:CDW) 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 CDW Corporation (NASDAQ:CDW) and shared the list of top tech stocks with strong return on equity. In addition, please check out our hedge fund investor letters Q2 2025 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.