Morningstar Magazine - August/September 2017 - 64
Investors
Madison Mid Cap Fund
GTSGX
Growth of $10K
12.65
GTSGX
14K
$
12.43
12
10
Morningstar US
Mid Growth TR
07/2014
07/2015
8
07/2016
Category
Mid-Cap Growth
Expense Ratio (%)
0.98
Morningstar Rating
QQQ
3-Yr Annl Total Rtn (%)
18.2
3-Yr Annl Total Rtn % Rank
26
Source: Morningstar. Data as of 06/30/2017
wide moats, compared with 16% for the
category norm.
Assessing management is another important
aspect of the investment process. They
look at capital allocation decisions, including stock
buybacks, debt repayment, and acquisitions.
Companies that use aggressive assumptions
in their earnings reporting, or try to spin away bad
news, are shunned.
Also important is management's alignment
with shareholder interests, such as high levels
of inside ownership.
"We want to see management teams that
are owner-operators," Toyama says. Take insurer
Brown & Brown BRO, which was 3.7% of the
portfolio as of the end of May. Brown's chairman-
who Toyama says owns 15% of the stock-
is the son of one of the founders, and the current
CEO is the third generation of the family to lead
64
Morningstar August/September 2017
the company. Madison first bought shares in
the second quarter of 2007 in the mid-$20 range,
and it was trading in the mid-$40s in June.
industry is still largely private pay, and
less vulnerable to generic competition than
human pharmaceuticals.
Long-Term Outlook
An exception in technology is enterprise software.
Hardware reseller CDW CDW, which sells
products from different manufacturers, is a stock
they have owned for three years. At more
than 4% of assets, it was one of the top five
holdings in the fund at the end of May.
As a result of the emphasis on wide-moat stocks,
there are some sectors of the stock market
where the Madison fund managers say it's harder
to find names that can make it into the
portfolio. That tends to include consumer-facing
technology where demand can be fickle,
or healthcare, where government regulation is
a constant uncertainty. The fund's stakes in
technology and health are both below the mid-cap
growth category norms.
Animal-pharmaceutical company Zoetis ZTS,
added to the portfolio in February, is one standout
in healthcare. As Toyama and Eisinger said
in the fund's first-quarter report-a frank
and illustrative discussion of both successes
and disappointments-the animal health
"With software, we feel like we can understand
the stickiness of a customer or revenues,"
Toyama says. "We feel we can be agnostic about
which may be winning in the marketplace
as long as CDW does a good job being a consultant." Madison bought CDW for the fund
in the second quarter of 2014 in the high $20 range
and it was at more than $60 in June.
On the valuation side, Madison puts to work
a variety of different valuation models depending
Table of Contents for the Digital Edition of Morningstar Magazine - August/September 2017
Contents
Morningstar Magazine - August/September 2017 - Cover1
Morningstar Magazine - August/September 2017 - Cover2
Morningstar Magazine - August/September 2017 - 1
Morningstar Magazine - August/September 2017 - 2
Morningstar Magazine - August/September 2017 - Contents
Morningstar Magazine - August/September 2017 - 4
Morningstar Magazine - August/September 2017 - 5
Morningstar Magazine - August/September 2017 - 6
Morningstar Magazine - August/September 2017 - 7
Morningstar Magazine - August/September 2017 - 8
Morningstar Magazine - August/September 2017 - 9
Morningstar Magazine - August/September 2017 - 10
Morningstar Magazine - August/September 2017 - 11
Morningstar Magazine - August/September 2017 - 12
Morningstar Magazine - August/September 2017 - 13
Morningstar Magazine - August/September 2017 - 14
Morningstar Magazine - August/September 2017 - 15
Morningstar Magazine - August/September 2017 - 16
Morningstar Magazine - August/September 2017 - 17
Morningstar Magazine - August/September 2017 - 18
Morningstar Magazine - August/September 2017 - 19
Morningstar Magazine - August/September 2017 - 20
Morningstar Magazine - August/September 2017 - 21
Morningstar Magazine - August/September 2017 - 22
Morningstar Magazine - August/September 2017 - 23
Morningstar Magazine - August/September 2017 - 24
Morningstar Magazine - August/September 2017 - 25
Morningstar Magazine - August/September 2017 - 26
Morningstar Magazine - August/September 2017 - 27
Morningstar Magazine - August/September 2017 - 28
Morningstar Magazine - August/September 2017 - 29
Morningstar Magazine - August/September 2017 - 30
Morningstar Magazine - August/September 2017 - 31
Morningstar Magazine - August/September 2017 - 32
Morningstar Magazine - August/September 2017 - 33
Morningstar Magazine - August/September 2017 - 34
Morningstar Magazine - August/September 2017 - 35
Morningstar Magazine - August/September 2017 - 36
Morningstar Magazine - August/September 2017 - 37
Morningstar Magazine - August/September 2017 - 38
Morningstar Magazine - August/September 2017 - 39
Morningstar Magazine - August/September 2017 - 40
Morningstar Magazine - August/September 2017 - 41
Morningstar Magazine - August/September 2017 - 42
Morningstar Magazine - August/September 2017 - 43
Morningstar Magazine - August/September 2017 - 44
Morningstar Magazine - August/September 2017 - 45
Morningstar Magazine - August/September 2017 - 46
Morningstar Magazine - August/September 2017 - 47
Morningstar Magazine - August/September 2017 - 48
Morningstar Magazine - August/September 2017 - 49
Morningstar Magazine - August/September 2017 - 50
Morningstar Magazine - August/September 2017 - 51
Morningstar Magazine - August/September 2017 - 52
Morningstar Magazine - August/September 2017 - 53
Morningstar Magazine - August/September 2017 - 54
Morningstar Magazine - August/September 2017 - 55
Morningstar Magazine - August/September 2017 - 56
Morningstar Magazine - August/September 2017 - 57
Morningstar Magazine - August/September 2017 - 58
Morningstar Magazine - August/September 2017 - 59
Morningstar Magazine - August/September 2017 - 60
Morningstar Magazine - August/September 2017 - 61
Morningstar Magazine - August/September 2017 - 62
Morningstar Magazine - August/September 2017 - 63
Morningstar Magazine - August/September 2017 - 64
Morningstar Magazine - August/September 2017 - 65
Morningstar Magazine - August/September 2017 - 66
Morningstar Magazine - August/September 2017 - 67
Morningstar Magazine - August/September 2017 - 68
Morningstar Magazine - August/September 2017 - 69
Morningstar Magazine - August/September 2017 - 70
Morningstar Magazine - August/September 2017 - 71
Morningstar Magazine - August/September 2017 - 72
Morningstar Magazine - August/September 2017 - 73
Morningstar Magazine - August/September 2017 - 74
Morningstar Magazine - August/September 2017 - 75
Morningstar Magazine - August/September 2017 - 76
Morningstar Magazine - August/September 2017 - 77
Morningstar Magazine - August/September 2017 - 78
Morningstar Magazine - August/September 2017 - 79
Morningstar Magazine - August/September 2017 - 80
Morningstar Magazine - August/September 2017 - Cover3
Morningstar Magazine - August/September 2017 - Cover4
Morningstar Magazine - August/September 2017 - Cover1I
Morningstar Magazine - August/September 2017 - Cover2I
Morningstar Magazine - August/September 2017 - I3
Morningstar Magazine - August/September 2017 - I4
Morningstar Magazine - August/September 2017 - I5
Morningstar Magazine - August/September 2017 - I6
Morningstar Magazine - August/September 2017 - I7
Morningstar Magazine - August/September 2017 - I8
Morningstar Magazine - August/September 2017 - I9
Morningstar Magazine - August/September 2017 - I10
Morningstar Magazine - August/September 2017 - I11
Morningstar Magazine - August/September 2017 - I12
Morningstar Magazine - August/September 2017 - I13
Morningstar Magazine - August/September 2017 - I14
Morningstar Magazine - August/September 2017 - I15
Morningstar Magazine - August/September 2017 - I16
Morningstar Magazine - August/September 2017 - I17
Morningstar Magazine - August/September 2017 - I18
Morningstar Magazine - August/September 2017 - I19
Morningstar Magazine - August/September 2017 - I20
Morningstar Magazine - August/September 2017 - I21
Morningstar Magazine - August/September 2017 - I22
Morningstar Magazine - August/September 2017 - I23
Morningstar Magazine - August/September 2017 - I24
Morningstar Magazine - August/September 2017 - I25
Morningstar Magazine - August/September 2017 - I26
Morningstar Magazine - August/September 2017 - I27
Morningstar Magazine - August/September 2017 - I28
Morningstar Magazine - August/September 2017 - I29
Morningstar Magazine - August/September 2017 - I30
Morningstar Magazine - August/September 2017 - Cover3I
Morningstar Magazine - August/September 2017 - Cover4I
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2024q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2023q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2022q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2021q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q4
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q3
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q2
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2020q1
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019winter
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019fall
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019summer
https://www.nxtbook.com/nxtbooks/morningstar/magazine_2019spring
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20191201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20180203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20181201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20170203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20171201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20160203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20161201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20150203
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20151201
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20141011
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140809
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140607
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140405
https://www.nxtbook.com/nxtbooks/morningstar/magazine_20140203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20141201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20130203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20131201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120405
https://www.nxtbook.com/nxtbooks/morningstar/investorconference2012
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20120203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20121201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20110203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20111201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405_lincoln
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20100203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20101201
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20091011
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090809
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090607
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090405
https://www.nxtbook.com/nxtbooks/morningstar/advisor_20090203
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007fall
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2007summer
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008spring
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008catalog
https://www.nxtbook.com/nxtbooks/morningstar/advisor_2008winter
https://www.nxtbookmedia.com