Investing with a Business Owner Mindset

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Today, near-term results have investors acting impulsively on daily stock price movements rather than taking a longer-term, businesslike approach to assessing a business's value. At Madison Investments, we believe that when you invest in a company, you’re not just trading a piece of paper but rather buying a genuine ownership stake in that business. Mid Cap Portfolio Manager, Andy Romanowich, explains Madison Investment's philosophy of investing with a business owner mentality.

Buying an ownership stake vs. trading pieces of paper

Most conventional investors are taught to follow a set of heuristics for investing, believing that for a company to be a good investment, its stock must fit a predefined mold based on certain characteristics. However, these characteristics tend to focus on near-term fluctuations in the stock’s price, as opposed to determining long-term value, as would be the focus of an owner of a business. At Madison Investments, we believe our role as investors takes on a bigger purpose. Here's how we think like a buyer:

Conventional Investing vs Ownership Mentality Conventional Investing vs. Ownership Mentality
EXAMPLE: Dollar Tree in 2020-2021

Dollar Tree, known for selling everything for $1, faced a significant test in the inflationary economic environment of 2020-2021. Download the PDF to see how Madison’s Mid Cap Equity team applied the business owner mentality to its analysis of the company.

Download PDF

Madison Mid Cap Equity Strategy

The Madison Mid Cap Equity strategy brings this philosophy to fruition. By investing with the mindset that we are buying a business, our research tends to focus on qualitative factors like competitive moats, customer preferences, management, and capital allocation decisions. These factors give us an indication of whether the business will survive and thrive over the long term and return value to shareholders.

Madison Mid Cap Strategy
“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”). MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

Any performance data shown represents past performance. Past performance is no guarantee of future results.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

This website is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Although the information in this report has been obtained from sources that the firm believes to be reliable, we do not guarantee its accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investments in midsize companies may entail greater risks than investments in larger, more established companies. Midsize companies tend to have narrower product lines, fewer financial resources, and a more limited trading market for their securities, as compared to larger companies. They may also experience greater price volatility than securities of larger capitalization companies because growth prospects for these companies may be less certain and the market for such securities may be smaller. Some midsize companies may not have established financial histories; may have limited product lines, markets, or financial resources; may depend on a few key personnel for management; and may be susceptible to losses and risks of bankruptcy.

Upon request, Madison may furnish to the client or institution a list of all security recommendations made within the past year.