Hotchkis & Wiley, an investment management company, released its fourth-quarter 2025 investor letter for the “Hotchkis & Wiley Large Cap Disciplined Value Fund.” A copy of the letter can be downloaded here. In Q4 2025, the S&P 500 returned 2.7%, bringing its yearly gains to 17.9%. Since the 2007-08 financial crisis, the Index has increased tenfold, achieving positive results in 15 of 17 years. However, high valuations have made investors cautious, particularly with the returns concentrated in a few stocks. ...

Industry Overview - The Staffing Firms industry is expected to gradually recover to pre-pandemic levels, enabling companies to pay regular dividends [1] - The industry encompasses a wide range of human resources and workforce solutions, including recruitment, payroll administration, and organizational planning [2] Market Trends - There is stable demand in the mature business services industry, with revenues and cash flows anticipated to recover to pre-pandemic levels [3] - The adoption of remote work and hybrid models has significantly increased, prompting staffing agencies to focus on flexible staffing solutions [4] - Technological advancements are being implemented to enhance operational efficiency, with AI-driven tools and platforms becoming more prevalent [5] Industry Performance - The Zacks Staffing Firms industry currently holds a Zacks Industry Rank of 227, placing it in the bottom 7% of 244 Zacks industries, indicating sluggish near-term prospects [6] - Over the past year, the industry has underperformed the S&P 500, declining 39.2% compared to the S&P 500's growth of 18.9% [8] Valuation Metrics - The industry is currently trading at an EV-to-EBITDA ratio of 5.76X, significantly lower than the S&P 500's 18.98X and the sector's 10.7X [9] Company Highlights Resources Connection (RGP) - RGP has seen favorable international growth, particularly in Europe, India, Japan, and the Philippines, with steady revenues and improved gross margins [14] - The company holds $90 million in cash with zero current debt, indicating a strong balance sheet [16] - RGP's current ratio is 2.64, suggesting strong short-term debt coverage capability [16] - The Zacks Consensus Estimate for RGP's 2025 earnings per share has been revised up by 14.3% [17] Kforce (KFRC) - Kforce reported a top line of $332.6 million and 63 cents in EPS, exceeding expectations [18] - The company maintains a strong balance sheet with zero current debt and a current ratio of 1.88 [20] - KFRC's shares have gained 21.1% over the past three months [21] HireQuest (HQI) - HQI's system-wide sales grew 6.1% year-over-year, with a net income of $2.3 million in the third quarter of 2025 [21][22] - The company's current ratio is 2.4, indicating a strong liquidity position [23] - HQI's shares have gained 29.6% over the past three months [23]

Core Thesis - The bullish thesis on Automatic Data Processing, Inc. (ADP) emphasizes its position as a high-quality, mission-critical services company with a strong business model characterized by recurring revenue and deep customer entrenchment [2][7] Business Model - ADP's core earnings power is derived from Employer Services, where clients pay recurring fees for payroll processing, tax filing, and essential HR functions [2] - The company boasts a 92.1% revenue retention rate, indicating that customers rarely leave once onboarded [3] - ADP earns interest income on approximately $31 billion of held client funds, generating about $1.2 billion of high-margin income in fiscal 2025 [3] Financial Performance - ADP efficiently converts earnings to cash, producing nearly $4.9 billion in operating cash flow on $4.1 billion of net income with minimal capital spending [5] - The company's margins may fluctuate due to investments in sales and product development, but these are seen as reinvestments to maintain a resilient franchise rather than signs of structural weakness [6] Market Position - ADP operates a co-employment model through its PEO segment, which can inflate reported revenue but still reflects meaningful economic revenue and margins [4] - The business is predominantly U.S.-based, with international payroll adding complexity that strengthens customer reliance and creates long-term margin expansion opportunities [4] - The company's competitive advantage is supported by high switching costs, regulatory complexity, and a broad distribution network that consistently generates new client wins [5]

Group 1 - The company has raised its full-year outlook, indicating confidence despite being early in the fiscal year [1][2] - The company reported a 17% revenue growth and beat earnings per share by two cents, with adjusted operating income growth of 15% and industry-leading adjusted margins of 41% [2][3] - The company has raised its earnings per share guidance to a growth of 9% to 11% for the full year and reaffirmed revenue guidance between 16.5% and 18.5% [3][4] Group 2 - The company attributes its strong performance to sustained demand for human capital management and HR outsourcing solutions, alongside a resilient small business employment market [3][4] - The upcoming second and third quarters are expected to be significant selling seasons, contributing to the company's confidence in raising earnings per share [4]

Core Insights - Investors are showing a bullish sentiment towards Workday (NASDAQ: WDAY), with significant options activity indicating potential upcoming developments [1][2] - The overall sentiment among large traders is 75% bullish and 25% bearish, with a notable disparity in the volume of call and put options [2] Options Activity - A total of 8 options trades were identified for Workday, with 7 calls amounting to $720,200 and 1 put totaling $51,510 [2] - The predicted price range for Workday over the past quarter is between $145.0 and $260.0 [3] Volume and Open Interest - An analysis of volume and open interest reveals key insights into liquidity and interest levels for Workday's options, particularly within the strike price range of $145.0 to $260.0 [4] Recent Trading Data - Noteworthy options activity includes several bullish call trades, with significant total trade prices such as $390,000 for a call at a strike price of $260.00 and $160,000 for a call at $250.00 [9][10] Analyst Ratings - Recent analyst opinions on Workday show an average price target of $294.0, with various analysts adjusting their ratings and targets, reflecting a mix of bullish and cautious sentiments [12][13] Company Overview - Workday is a cloud-only software provider specializing in human capital management, financial management, and business planning solutions, founded in 2005 and headquartered in Pleasanton, California [11] Current Stock Performance - Workday's stock price is currently at $246.11, reflecting a 1.38% increase, with a trading volume of 897,313 [15]

Company Overview - Atlantic International Corp. (NASDAQ: ATLN) is a growth-oriented holding company focused on delivering innovative workforce solutions, outsourced services, and human capital management [6] - The company partners with businesses nationwide to provide flexible, scalable staffing and operational support, helping clients adapt, compete, and grow in dynamic markets [6] - Atlantic employs a disciplined acquisition strategy and is committed to operational excellence, aiming to build a diversified platform that drives sustainable value for customers, employees, and shareholders [6] Conference Details - Atlantic International Corp.'s CEO, Jeffrey Jagid, is scheduled to present at the 2025 Annual Gateway Conference on September 4 at 9:00 a.m. Pacific Time [2] - The presentation will be webcast live and available for replay, with additional opportunities for one-on-one meetings with investors throughout the conference [2] - The Gateway Conference connects high-growth companies with institutional investors, analysts, and capital markets professionals, celebrating 25 years of fostering impactful industry connections [3][4] Industry Context - The Gateway Conference features a diverse array of companies across various sectors, including technology, cleantech, consumer, industrials, financial services, and healthcare [4] - Attendees will have exclusive access to senior executives from over 100 private and public companies, providing insights into emerging growth opportunities [4]

Core Insights - Analysts at Evercore ISI identified Microsoft and Salesforce as resilient companies amid potential spending slowdowns, while Oracle is noted as more exposed [1] - Oracle's evolving business model and focus on AI enhance its resilience, despite initial perceptions [2] - Oracle is critical to global databases and AI infrastructure, with nearly 100% of Fortune 500 companies utilizing its services [3][4] Business Model and Market Position - Oracle's cloud shift has been pivotal for its longevity, with significant growth in data center and AI capabilities [2] - The company is entrenched in enterprise resource management, human capital management, and supply chain management, with a forecasted low-double-digit CAGR through the decade's end [5] - Oracle has secured new deals with major hyperscalers like Amazon, Alphabet, and Microsoft, embedding its technologies across the data center landscape [6] Market Share and Growth Potential - The top three hyperscalers hold approximately 63% of the global market share, while Oracle maintains a 3% share, ranking among the top five Western cloud providers [7] - Oracle's capacity is expected to double by 2025, driven by AI-focused facilities, which will likely enhance market share [7] Financial Performance and Outlook - Oracle's results in the latter half of C2024 were solid but fell short of market expectations, leading to a stock price correction [9] - The company's backlog grew by 49% in FQ2 and accelerated to 62% in FQ3, indicating strong demand for computing space [10] - Analysts have reset their forecasts, leading to a diminished outlook for FQ4 but an increased long-term revenue and earnings growth outlook [11] Stock Price and Valuation - Oracle's stock price forecast indicates a potential upside of 35% from the current price, with a consensus target of $178.65 [10][14] - The stock is currently trading at a low valuation of 10x the 2023 earnings forecast, suggesting a rebound is likely [15]