SGA U.S. Large Cap Growth Exited Its Position in Workday (WDAY)
Sustainable Growth Advisers (SGA), an investment management company, released its third-quarter investor letter for its “U.S. Large Cap Growth Strategy.” A copy of the letter can be downloaded here. The portfolio returned -1.3% (Gross) and -1.4% (Net) in the third quarter, compared to a 10.5% return for the Russell 1000 Growth Index and an 8.1% return for the S&P 500 Index. SGA’s investment objective is to invest in high-quality growth businesses expected to achieve consistent mid-teens earnings growth, accompanied by stable revenue and cash flow. However, in Q3, the market leadership was adverse for SGA’s investment style as lower-quality stocks and cyclical industries outperformed. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, the SGA U.S. Large Cap Growth Strategy highlighted stocks such as Workday, Inc. (NASDAQ:WDAY). Workday, Inc. (NASDAQ:WDAY) is a technology company that offers enterprise cloud applications. The one-month return of Workday, Inc. (NASDAQ:WDAY) was -0.85%, and its shares lost 14.72% of their value over the last 52 weeks. On December 31, 2025, Workday, Inc. (NASDAQ:WDAY) stock closed at $214.78 per share, with a market capitalization of $57.346 billion.
SGA U.S. Large Cap Growth Strategy stated the following regarding Workday, Inc. (NASDAQ:WDAY) in its third quarter 2025 investor letter:
"We liquidated our position in Workday, Inc. (NASDAQ:WDAY) due to forced attrition as signs of a deteriorating competitive environment became clear. While Workday has maintained annual revenue guidance for the year, the company has guided to slower revenue growth going forward. We believe this indicates mounting pressure from rivals, especially with SAP’s renewed momentum in the space. Our recent interactions with channel partners corroborated that an SAP renaissance is underway, making it increasingly difficult for Workday to beat and raise estimates. Although there are positives, such as ongoing margin expansion and strong AI product traction, we decided to exit our position and reallocated the proceeds to companies with higher growth prospects."
Workday, Inc. (NASDAQ:WDAY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 64 hedge fund portfolios held Workday, Inc. (NASDAQ:WDAY) at the end of the third quarter, compared 76 in the previous quarter. In the fiscal third quarter of 2026, Workday, Inc. (NASDAQ:WDAY) reported total revenue of $2.432 billion, representing a growth of 13% year-over-year. While we acknowledge the potential of Workday, Inc. (NASDAQ:WDAY) 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 thebest short-term AI stock.
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