The Numbers Behind RGA's Q2 Swap: Workday Out, Adobe and GitLab In

Every three months, institutional holdings reach the financial wires and get recycled into headlines. RGA Investment Advisors, a New York firm that describes its own approach as long-term, low-turnover growth at a reasonable price, gave this quarter's cycle something more useful than a list: a small rotation with a clear direction. It sold Workday, closed its Lattice Semiconductor position and dropped Disney, and it opened new stakes in Adobe and GitLab. Read through a sector-relative factor lens, the pattern is coherent. The timing, however, is older than it looks, and that lag is the real lesson.

The quarter ended June 30, and the trades came out with the firm's second-quarter commentary in late August. Between those two dates, one of the three sells changed character. On Aug. 13, Reuters reported that Silver Lake was in talks to take Workday private; the shares jumped about 19% in a single session, their best day in a decade, pushing the market value above $50 billion. Holdings disclosure is always a lagging indicator — it describes what someone decided, on a date that is now in the past. The disclosed Workday exit and today's price are two different moments.

So the useful question is not "should I copy RGA?" It is what the current data says about the names on both sides of the trade. Run that comparison and the quarter reads as a case study in someone's process, with the numbers visible.

Start with Adobe, because it carries the strongest single signal. Adobe trades at about 15x trailing earnings. That is not cheap software; it is cheap for software with Adobe's margin profile. In the current data, Microsoft trades near 27x earnings, Autodesk near 37x, Intuit about 22x — and Adobe prints a roughly 36% operating margin against that field, plus a ~40% free-cash-flow margin and ~63% return on equity. Free cash flow runs about $10 billion a year, close to 9% of the market cap. Revenue growth is a modest ~11.5%, but it is steady and estimates have beaten quarter after quarter. On a five-factor basis, this is the rare overlap: valuation and profitability grading A at the same time, the ~15x multiple and the ~36% margin doing the work. The price action finally agrees — Adobe is off about 21% year to date, but up about 16% in 20 trading days and just back above its 200-day average.

Workday is the mirror image, and it is why the buy side and the sell side belong in the same frame. Workday trades at roughly 58x trailing earnings and about 5x sales, with an operating margin near 10% — everything Adobe is not: expensive on the multiple, thin on the margin. Revenue growth of about 13% has decelerated from the mid-teens a year earlier. Paying 58x for slower growth and a 10% margin is paying for a story the numbers have not delivered; on Valuation and Profitability the factor read is F and C territory. RGA itself was buying Workday a year earlier — its mid-2025 letter argued that a cost program under then-CEO Carl Eschenbach could turn double-digit growth into faster earnings growth, at what it pegged as about 25x expected earnings when shares traded near $226 in August 2025. By June 2026 the position was gone, and the market has since re-priced the name around the buyout. AInvest's aggregate signal currently labels Workday a Buy, which is a deal-spread call, not a factor call. The two are different trades.

The second purchase is the growth side of the trade, and the evidence has to live there, because the valuation is not friendly. GitLab's revenue is growing about 25% with an ~87% gross margin; GAAP earnings are negative, but free cash flow is positive at roughly $260 million and the balance sheet is net cash. At about 6x enterprise value to sales, GitLab is expensive on an absolute basis but lands in a different price tier than peer Datadog at ~20x sales. Revisions are confirming the read: the latest reported quarter beat consensus by a wide margin — EPS of about $0.24 against roughly $0.16 expected — and the shares are up about 28% in 20 days, above both moving averages. What could change it is execution rather than narrative: a May restructuring called "Act 2", a plan that cut the country footprint by about 30% and reorganized engineering into roughly 60 autonomous teams oriented around agentic AI — a reasonable refocus in principle, a risk until the reports prove it. In the wake of the Workday deal, KeyBanc analysts flagged GitLab as a likely acquisition candidate. Factor read: A on growth, a pass on valuation only in context, momentum confirming — the volatile half of the pair, sized accordingly.

Lattice Semiconductor is the sell that best illustrates the second half of "let winners run." The stock had returned about 78% over the trailing year, from its $60.50 low to a $157 high — and RGA, per its prior commentary, had only added it as a new stake in the fourth quarter, then sold it by June: a quick flip for a low-turnover book. The current numbers explain the discipline. Even after a record quarter with revenue up about 62%, the stock trades at about 25x sales and roughly 450x earnings — an A growth story priced for perfection — and the momentum has since broken. Lattice Semiconductor sits near $114, below its 50-day average, with an RSI near 37, down about 14% in five sessions. A 78% run on an AI-capex narrative that loses its technical support is exactly what a process hands back to the market.

Disney is the piece that is not software, and it is the best reminder that "cheap" has no meaning without a sector. Disney looks reasonable on its own: about 22x earnings and a low 1.6x book value. Run the group comparison and it is not the cheap one in the room — Disney trades at about 11x EV/EBITDA while Comcast trades at about 5x and Warner Bros. Discovery at about 7x, and its ~1.4% dividend yield is roughly a third of Comcast's. Revenue grows about 4.5% while free cash flow is down ~28% year over year as the parks-and-streaming rebuild absorbs close to $9 billion of annual capex. The factor read on Disney: mid-tier profitability, a premium valuation against its own sector, and a negative free-cash-flow trajectory. A name to watch for a dividend-oriented sleeve, not to chase on last quarter's window.

None of this proves RGA's entry points, and two of the three exits have moved on their own since the quarter closed. What is reproducible is the discipline the current data shows: buy software that is cheap and high-margin at the same time, do not pay a rich multiple for a thin margin, take profits into strength, and never call a stock cheap until the sector comparison has had its say. RGA's quarter, read that way, is a barbell in miniature — a steady cash-flow machine on one side and a high-beta option on the other. The specific trades are already dated; the factor checks are the part you can still use. Run those before, not after, you consider importing anyone's portfolio.