Madison Small Cap Fund Trimmed LegalZoom.com (LZ) in Q2

Madison Investments, an investment advisor, released its “Madison Small Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The second quarter started as a continuation of the first quarter. As the liberation day tariffs were catastrophic, sending both equities and treasuries steeply lower. Later, the administration set a pause in the tariff implementation, which led equities to rebound, supported by better-than-expected macroeconomic data, particularly regarding inflation and employment. The Russell 2000 Index is up 8.5% for the quarter and down only 1.79% year-to-date. The Madison Small Cap Fund (class Y) returned 4.42% in the quarter, lagging the Russell 2000 and Russell 2500. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Madison Small Cap Fund highlighted stocks such as LegalZoom.com, Inc. (NASDAQ:LZ). LegalZoom.com, Inc. (NASDAQ:LZ) is an online platform that supports the legal, compliance, and business management needs of small businesses and consumers. The one-month return of LegalZoom.com, Inc. (NASDAQ:LZ) was -0.19%, and its shares gained 59.25% of their value over the last 52 weeks.  On September 17, 2025, LegalZoom.com, Inc. (NASDAQ:LZ) stock closed at $10.67 per share, with a market capitalization of $1.923 billion.

Madison Small Cap Fund stated the following regarding LegalZoom.com, Inc. (NASDAQ:LZ) in its second quarter 2025 investor letter:

"LegalZoom.com, Inc. (NASDAQ:LZ): Although new management has done an admirable job in improving fundamentals, we decided to sell this small position as we could not gain confidence in the size of the addressable market and their ability to execute further share gains."

LegalZoom.com, Inc. (NASDAQ:LZ) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 35 hedge fund portfolios held LegalZoom.com, Inc. (NASDAQ:LZ) at the end of the second quarter, compared to 32 in the previous quarter. LegalZoom.com, Inc.’s (NASDAQ:LZ) second quarter revenue increased 9% year-over-year to $193 million. While we acknowledge the potential of LegalZoom.com, Inc. (NASDAQ:LZ) 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 LegalZoom.com, Inc. (NASDAQ:LZ) and shared the list of best small cap stocks to buy. 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.