Carillon Tower Advisers, an investment management company, released its fourth-quarter 2025 investor letter for the “Carillon Scout Mid Cap Fund”. A copy of the letter can be downloaded here. Major U.S. equity indices delivered positive returns in the fourth quarter, while the Russell Midcap® Index return lagged with nominal positive gains. Strong corporate earnings revisions and lower short-term interest rates supported U.S. market returns. Investors’ focus on an optimistic 2026, and consensus outperformed the market amid long-term government shutdowns. High sector return dispersion was observed in the Russell Midcap Index, with healthcare, materials, and IT leading. However, investors’ bias towards higher beta and more cyclical stocks led Communication services, real estate, and utilities to lag in the quarter.  The fund expects the Midcap equities to trade higher in 2026, supported by broader market involvement, though this view aligns with consensus. U.S. market index earnings are projected to grow significantly in 2026 despite price-to-earnings ratios being higher than historical averages.  Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Carillon Scout Mid Cap Fund highlighted stocks like Encompass Health Corporation (NYSE:EHC). Encompass Health Corporation (NYSE:EHC) is a leading inpatient rehabilitation services provider. On March 20, 2026, Encompass Health Corporation (NYSE:EHC) stock closed at $95.86 per share. One-month return of Encompass Health Corporation (NYSE:EHC) was -9.69%, and its shares lost 4.10% over the past 52 weeks. Encompass Health Corporation (NYSE:EHC) has a market capitalization of $9.645 billion.

Carillon Scout Mid Cap Fund stated the following regarding Encompass Health Corporation (NYSE:EHC) in its fourth quarter 2025 investor letter:

"Encompass Health Corporation (NYSE:EHC) operates in-patient rehabilitation facilities (IRFs), specialty hospitals focused on patients requiring high degrees of care. Encompass shares lagged as capital rotated into more aggressive industries within healthcare, and because management commentary was viewed as setting a conservative bar for 2026. Management has a history of keeping expectations in check, so we think the company will likely clear this initial outlook. Encompass is the only company to be meaningfully expanding IRF beds at a time when demand is healthy, so we believe Encompass could be positioned to continue to compound value over time."

Encompass Health Corporation (NYSE:EHC) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 50 hedge fund portfolios held Encompass Health Corporation (NYSE:EHC) at the end of the fourth quarter, the same as in the previous quarter. While we acknowledge the potential of Encompass Health Corporation (NYSE:EHC) 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 Encompass Health Corporation (NYSE:EHC) and shared Madison Small Cap Fund's views on the company. In addition, please check out our hedge fund investor letters Q4 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.