Hotchkis & Wiley Large Cap Fund Details Workday Strategy in Second-Quarter Letter
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NEW YORK, Sept. 1 (AP) — The Hotchkis & Wiley Large Cap Fundamental Value Fund released its second-quarter 2026 investor letter on Monday, outlining the fund's performance and detailing its investment rationale regarding exposure to the artificial intelligence sector, specifically highlighting a position in Workday, Inc.
The quarterly disclosure, distributed to shareholders across the United States, marks the firm's latest communication regarding its portfolio adjustments as market dynamics shift toward technology-driven valuations. In the letter, fund managers addressed the broader market environment of mid-2026, noting how fundamental value principles are being applied to high-growth sectors traditionally dominated by momentum investors.
Workday, Inc., a provider of enterprise cloud applications for human resources and finance, was identified as a key holding within the portfolio. The fund's managers articulated a specific thesis for maintaining or adjusting their stake in the company, linking its valuation metrics to long-term cash flow projections rather than short-term AI hype. The letter suggests that while the broader market has reacted aggressively to artificial intelligence developments, the fund seeks companies where technology integration supports sustainable earnings growth.
The disclosure comes as institutional investors increasingly scrutinize how value-oriented funds navigate the rapid expansion of AI infrastructure and software applications. Hotchkis & Wiley's approach appears to focus on distinguishing between speculative positioning and fundamental business improvements driven by automation and data analytics. By explicitly naming Workday, the fund signals confidence in the company's ability to monetize its technological advancements while maintaining disciplined capital allocation.
Market analysts have noted that such transparency from value funds regarding AI holdings is becoming more common as the sector matures. The letter did not specify the exact percentage of the portfolio allocated to Workday or provide precise return figures for the quarter, focusing instead on the strategic logic behind the investment decisions. This approach aligns with the firm's historical emphasis on qualitative analysis and long-term holding periods.
The release of the second-quarter letter provides a snapshot of the fund's stance as it enters the latter half of 2026. With the technology sector remaining volatile, investors are watching closely to see if other value managers will follow suit in adopting similar strategies for AI-related equities. The fund's performance relative to its benchmark index remains a key metric for shareholders evaluating the efficacy of this specific investment thesis.
Questions remain regarding how the fund will adjust its exposure if market volatility intensifies or if regulatory changes impact the AI sector in the coming months. Investors will likely look to the third-quarter update for further clarification on whether the Workday position represents a tactical entry or a core long-term conviction as the industry evolves.