Here's Why Madison Mid Cap Fund Decided to Sell Dollar Tree (DLTR)

Madison Investments, an investment advisor, released its “Madison Mid Cap Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the second quarter, the fund (Class Y) returned 5.2% compared to the 8.5% increase for the Russell Midcap Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, the Madison Mid Cap Fund highlighted stocks such as Dollar Tree, Inc. (NASDAQ:DLTR). Dollar Tree, Inc. (NASDAQ:DLTR) operates discount stores in the United States and Canada. The one-month return of Dollar Tree, Inc. (NASDAQ:DLTR) was -14.79%, and its shares gained 32.75% of their value over the last 52 weeks. On September 19, 2025, Dollar Tree, Inc. (NASDAQ:DLTR) stock closed at $95.26 per share, with a market capitalization of $19.43 billion.

Madison Mid Cap Fund stated the following regarding Dollar Tree, Inc. (NASDAQ:DLTR) in its second quarter 2025 investor letter:

"We sold two holdings during the quarter, Dollar Tree, Inc. (NASDAQ:DLTR) and Brown-Forman. At Dollar Tree, we were encouraged by the recent sale of the Family Dollar business and performance of the latest iteration of their multi-price product offering within the Dollar Tree stores. Management had also done a nice job of quickly mitigating the cost headwinds from the first round of Chinese tariffs. However, as more tariff announcements came, the situation was developing toward a scenario that was nearly worst case for the company, relative to all the downside scenarios we previously outlined for the business. With the risk profile heightened, we decided to sell the position."

Dollar Tree, Inc. (NASDAQ:DLTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 59 hedge fund portfolios held Dollar Tree, Inc. (NASDAQ:DLTR) at the end of the second quarter, compared to 67 in the previous quarter. In Q2 2025, Dollar Tree, Inc.’s (NASDAQ:DLTR) net sales increased 12.3% to $4.6 billion, driven by comp sales growth. While we acknowledge the potential of Dollar Tree, Inc. (NASDAQ:DLTR) 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 Dollar Tree, Inc. (NASDAQ:DLTR) and shared Broyhill Asset Management's views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.