RGA Investment Advisors, an investment management company, has released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The second quarter-end figures concealed the inherent volatility in the market, which began with a steep sell-off and ended with clarity around global trade that changed the environment for evaluating enterprises. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.
In its second-quarter 2025 investor letter, RGA Investment Advisors 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 -3.26%, and its shares lost 2.81% of their value over the last 52 weeks. On August 15, 2025, Workday, Inc. (NASDAQ:WDAY) stock closed at $226.09 per share, with a market capitalization of $60.37 billion.
RGA Investment Advisors stated the following regarding Workday, Inc. (NASDAQ:WDAY) in its second quarter 2025 investor letter:
“Workday, Inc. (NASDAQ:WDAY) is a company we followed closely for some time. The company offers mission critical software for human capital management–in essence, Workday powers the HR department of the majority of Fortune 500 companies and a growing cadre of small business. The company has been broadening its offering from the HR department to finance functions and is slowly but surely gaining traction. Although growth has slowed in recent years, revenues continue to compound in the double digits, powered by a combination of new logo wins and land-and-expand successes with existing customers.
Our foremost points of hesitation on Workday in the past had been a combination of valuation and questions about the company’s willingness to drive margin. In early 2024, the company named Carl Eschenbach full CEO after having shared the job with one of the co-founders. Eschenbach seems far more keen on streamlining operations and driving margin progress, as evidenced by the early 2025 restructuring and continued progress on the margin front. This should allow double digit revenue growth to translate into considerably more earnings growth.
SaaS companies have fallen out of favor since the emergence of AI and this has led to continual multiple compression across the board. Workday is no exception. At the time of our purchase, shares were changing hands at 25x this year’s expected EPS and 18x EBITDA and 17x free cash flow, with all slated to grow in the vicinity of 20%. At these valuations, our base case is that returns should follow the growth in free cash flow (i.e. a 20% CAGR), with the potential for the multiple to rerate more favorably as Workday proves its resilience to AI. Even more upside is possible if Workday reaccelerates growth, something we believe is more likely than not, though it need not happen in our base case for strong returns.”
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Workday, Inc. (NASDAQ:WDAY) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 85 hedge fund portfolios held Workday, Inc. (NASDAQ:WDAY) at the end of the first quarter, which was 89 in the previous quarter. Workday, Inc. (NASDAQ:WDAY) reported revenue of $2.24 billion in the fiscal first quarter of 2026, representing an increase of 13% year-over-year. While we acknowledge the risk and potential of Workday, Inc. (NASDAQ:WDAY) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Workday, Inc. (NASDAQ:WDAY) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Workday, Inc. (NASDAQ:WDAY) and shared the list of AI stocks making headlines in the third week of August. In addition, please check out our hedge fund investor letters Q2 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.
