Sally Beauty Holdings, Inc. (NYSE:SBH) enjoys a market that has limited competitors offering the same professional grade beauty supplies to non-professional consumers. Blue Ridge Capital picked up 4.765 million shares of Sally Beauty last quarter and has already realized a 26% profit on the stock since the first of the year. The stock appreciated following a bullish earnings report—revenue was up 4.7% and EPS was up $0.03—but it’s starting to come down off its high of $27.87 on profit taking, presumably speaking.
Finally, there is Workday Inc (NYSE:WDAY), which offers human capital management such as payroll services, financial management and analytics applications. Workday has had a nice run–up over the past month, but there are worrisome signs of fatigue in the stock both technically and from a fundamental standpoint. Although revenue has been improving, analysts are concerned that the sluggish rate of revenue gains points to a deceleration in growth. Equally as worrisome, sales devoted to COGS has deteriorated from -$80 million to -$119 million. Workday also faces stiff competition from SAP AG (ADR) (NYSE:SAP) and others, all of whom are better positioned for the larger client than Workday is marketing itself toward.
With the exception of Workday, the new additions to Blue Ridge Capital’s equity portfolio should contribute to the continued growth in the fund. These recent picks offer few surprises to the overall strategy of the fund to stick with the technology and services sectors. Our guess is the Blue Ridge will increase their position in Realogy and HIS, as these stocks have the best potential for additional gains. Others like Workday and Sally Beauty have probably had their best days behind them for the near future.