We recently compiled a list of the Top 10 Stocks to Buy According to Eagle Capital Management. In this article, we are going to take a look at where Workday, Inc. (NASDAQ:WDAY) stands against the other stocks.
Eagle Capital Management, a New York-based hedge fund, was founded in 1988 by Beth and Ravenel Curry. Their son, Ravenel Boykin Curry IV, joined the firm around the early 2000s after managing a portfolio at Kingdon Capital and is currently a key partner. A Yale University graduate with an Economics degree and an MBA from Harvard Business School, he plays a pivotal role in the firm’s strategy. Historically, Eagle has outperformed major benchmarks, including the broader market and the Russell Value Index. Over five years, Eagle delivered a 5.7% return versus the market’s 2.4%, and since its inception, it has generated a cumulative return of 2,031%, significantly surpassing both indices.
Eagle Capital Management adheres to a disciplined investment philosophy centered on identifying undervalued companies with unrecognized long-term growth potential. The firm employs a fundamental, bottom-up research approach, focusing on the key drivers of long-term value creation. By maintaining an extended investment horizon, Eagle Capital is able to take a distinctive perspective on industry and company trends. The firm’s investment strategy prioritizes businesses with two essential characteristics: strong underlying assets capable of generating cash flow and sustaining value even in challenging market conditions, and transformative changes within the company that remain unrecognized by the broader market yet are likely to drive future growth. This approach aims to provide downside protection during market downturns while positioning the portfolio for enhanced returns as these changes materialize. These core principles have been integral to Eagle Capital’s strategy since its founding, forming the foundation of its competitive advantage and contributing to its consistent market outperformance since 1988.
Moreover, Eagle Capital Management follows a value-oriented investment strategy with a long-term perspective, assessing price in relation to intrinsic value rather than relying solely on traditional valuation metrics like price-to-earnings or price-to-book ratios. The firm’s investment team focuses on long-term prospects, particularly beyond five years, analyzing business growth, industry dynamics, and margin potential while identifying opportunities that the broader market may overlook. A key component of Eagle’s strategy is maintaining a “Margin of Safety,” achieved through valuation discounts, business resilience, growth potential, and strong, experienced leadership.
The firm concentrates its portfolio on high-conviction investments, typically holding 25-35 stocks. As of Q4 2024, it holds over $27.4 billion in 13F securities, and its top ten positions account for 57.62% of its portfolio. This approach allows Eagle to focus on asymmetric risk opportunities, ensuring that its top positions offer significant upside potential while maintaining strong downside protection. Adopting a private equity-style approach to public equity investing, Eagle builds positions in high-quality businesses with sustainable returns and durability. A rigorous due diligence process precedes any investment decision, and the firm leverages direct access to senior management at portfolio companies to gain deeper insights into long-term strategies, enabling decisive action when the right opportunities emerge. Since its inception, Eagle has consistently applied the same investment philosophy, aiming to generate superior returns through rigorous valuation analysis and a long-term perspective. The firm’s long-term investment horizon allows it to take a differentiated approach to market trends, focusing on businesses undervalued relative to their intrinsic earnings power.
Our Methodology
The stocks discussed below were picked from Eagle Capital Management’s Q4 2024 13F filings. They are compiled in the ascending order of the hedge fund’s stake in them as of December 31, 2024. To assist readers with more context, we have included the hedge fund sentiment regarding each stock using data from 1,008 hedge funds tracked by Insider Monkey in the fourth quarter of 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Workday, Inc. (NASDAQ:WDAY)
Number of Hedge Fund Holders as of Q4: 89
Eagle Capital Management’s Equity Stake: $1.42 Billion
Workday, Inc. (NASDAQ:WDAY) is an American on‑demand (cloud-based) financial management, human capital management, and student information system software vendor. On February 25, 2025, the company announced its fourth quarter fiscal 2025 earnings; it exceeded financial analyst expectations, reporting earnings per share (EPS) of $1.92 versus the projected $1.78. Moreover, it generated $2.21 billion in revenue, surpassing estimates of $2.18 billion with a 15% year-over-year increase. This growth was driven by a 16% rise in subscription services, fueling strong expansion in its financial offerings. Additionally, Workday, Inc. (NASDAQ:WDAY) achieved a 240-basis point improvement in its adjusted operating margin, reaching 26.4%, which contributed to a 22% increase in EPS. Workday’s impressive performance highlights its effective investment strategy, growing subscriber base, and continued product adoption, reinforcing its strong market position.
For Q5, Workday, Inc. (NASDAQ:WDAY) anticipates $8.5 billion in sales with a 14% growth rate and an adjusted operating gross margin of 28%, surpassing estimates by 210 basis points. The stock has surged over 12% post-market, signaling strong investor confidence and potential for further growth. While volatility has been a factor in recent years, Workday remains focused on sustained profitability, projecting a 14% increase in subscription revenue for fiscal 2026 alongside a 28% operating margin, reinforcing its commitment to balanced expansion and financial strength.
As of Q4 2024, Eagle Capital Management significantly increased its holdings in Workday, Inc. (NASDAQ:WDAY) to over 5.51 million shares, marking a 39% rise from 3.97 million shares in Q3. The fund’s stake in the company is now valued at approximately $1.42 billion. Insider Monkey’s database indicated that 89 hedge funds held stakes in the company at the end of Q4 2024, with a value of nearly $5.56 billion, as opposed to 84 funds in Q3.
Workday, Inc. (NASDAQ:WDAY)’s ability to consistently surpass financial expectations, driven by strong subscription growth and expanding profit margins, underscores its resilience and market leadership in cloud-based enterprise solutions. Additionally, increasing institutional investment reflects strong investor confidence in Workday’s long-term growth potential and financial stability.
Parnassus Growth Equity Fund stated the following regarding Workday, Inc. (NASDAQ:WDAY) in its Q2 2024 investor letter:
“Within Information Technology, we added Workday, Inc. (NASDAQ:WDAY) and funded it with the sale of Palo Alto Networks. Workday is a category leader serving a large, growing enterprise software market. Despite near-term macro uncertainty across software, we believe Workday is well positioned long term, and key initiatives such as its partnership with other service providers can drive incremental growth over the next few years.”
Overall WDAY ranks 6th on our list of the stocks to buy according to Eagle Capital Management. While we acknowledge the potential of 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 WDAY but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.