Artisan Small Cap Fund Decided to Exit Dayforce (DAY)

Artisan Partners, an investment management company, released its “Artisan Small Cap Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. Investor sentiment at the beginning of 2025 was positive. In 2024, US equities once again outperformed their global counterparts, and there was optimism that the new Republican administration would strengthen the idea of US exceptionalism. However, the first quarter did not meet those expectations. In the quarter, its Investor Class fund ARTSX returned -10.14%, Advisor Class fund APDSX posted a return of -10.10%, and Institutional Class fund APHSX returned -10.07%, compared to a return of -11.12% for the Russell 2000 Growth Index. Markets experienced weakness due to rising fiscal and geopolitical uncertainties during the quarter. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first-quarter 2025 investor letter, Artisan Small Cap Fund highlighted stocks such as Dayforce Inc. (NYSE:DAY). Ceridian HCM Holding Inc. changed its name to Dayforce Inc. in February 2024. Incorporated in 1992, Dayforce Inc. (NYSE:DAY) is a human capital management (HCM) software company. The one-month return of Dayforce Inc. (NYSE:DAY) was 0.07%, and its shares gained 17.00% of their value over the last 52 weeks. On June 2, 2025, Dayforce Inc. (NYSE:DAY) stock closed at $58.23 per share, with a market capitalization of $9.31 billion.

Artisan Small Cap Fund stated the following regarding Dayforce Inc. (NYSE:DAY) in its Q1 2025 investor letter:

“Among our top detractors were Veracyte, MACOM and Dayforce Inc, (NYSE:DAY). Dayforce is a cloud-based provider of payroll and related software. We believe that the company’s transition to a recurring revenue model via its Dayforce suite will not only translate into margin expansion but also enable the company to capture market share. The company issued weaker-than-expected earnings results, citing a number of small impacts, such as lower-than-expected seasonal hiring trends during the holidays, currency headwinds and severe weather events. What we found more disappointing was its commentary of very solid booking numbers so far in 2025, without changing its prior 2025 outlook. After a multiyear investment campaign, we decided to move on to higher conviction opportunities.”

A worker smiling as they receive their pay check.

Dayforce Inc (NYSE:DAY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held Dayforce Inc (NYSE:DAY) at the end of the first quarter, which was 25 in the previous quarter. In Q1 2025, Dayforce Inc. (NYSE:DAY) reported revenue of $481.8 million, up 11.7% year-over-year. While we acknowledge the potential of Dayforce Inc. (NYSE:DAY) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Dayforce Inc. (NYSE:DAY) and shared Baron Asset Fund’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 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.