Paul Singer's Elliott Bet $2 Billion on Workday. Its Earnings Just Put That Bet to the Test Paul Singer doesn't take small positions when he wants attention. Elliott Investment Management built a stake of more than $2 billion in Workday and told CNBC it liked what it saw. Workday makes HR and finance software for big companies. It's the kind of unglamorous business that keeps the lights on for corporate America, even when nobody's talking about it at parties. That's kind of the point. While AI darlings like Microsoft and Nvidia hit new highs, Workday's stock had lagged. Elliott saw a gap between the price and what it thought the company was actually worth. Elliott didn't come in swinging. Instead, it publicly backed CEO Carl Eschenbach and CFO Zane Rowe, calling the leadership team proven and the growth outlook strong. That's not Elliott's usual style. This is a firm known for demanding board seats and forcing breakups. Here, it chose praise over pressure. The timing wasn't random. Workday had just laid out a multi-year plan to sharpen its operating model and capital allocation, the kind of roadmap activists usually have to demand. Workday has also been on an AI shopping spree. It has picked up conversational recruiting software and other AI tools to keep pace with rivals racing to automate hiring and HR workflows. The company followed that with an even bigger move, agreeing to buy an AI firm for roughly $1.1 billion, its third AI-related acquisition in about two months. Workday operates in a crowded HR software market where every major vendor is racing to bolt AI onto legacy platforms. Elliott's bet assumes Workday's scale and existing customer base give it an edge in that race. Fast forward to this week. Workday's fiscal second-quarter results, reported August 27, showed revenue up nearly 13% and earnings beating estimates. The board also approved a fresh multibillion-dollar stock buyback alongside those results. That's a direct answer to the capital-discipline questions activists like Elliott tend to raise. Those numbers are an early scorecard on the thesis Elliott backed. Growth held up, margins expanded, and management kept its promise on returning cash to shareholders. None of this guarantees Elliott's bet pays off. Activist campaigns can take years to fully play out, and this one is still in its early innings. What It Means for YouYou don't need $2 billion to learn from this. Elliott looked past a stock that was underperforming flashier AI names and asked whether the underlying business was actually broken. Sometimes the boring, unloved stock in your portfolio isn't a mistake. It might just be waiting for the market to notice what a patient, research-heavy investor already saw, as CNBC first reported when Elliott's stake became public. |
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