Founder at Stock Spin-off Investing, Stock Spin-Off Investing

Richard Howe

Founder at Stock Spin-off Investing

Stock Spin-Off Investing

Generate attractive returns by taking advantage of inefficiencies in the stock spin-off market.

Stock Spin-offs

Event-Driven

<ul><li>On February 24, 2025, Western Digital (WDC) will spin-off 80.1% of its stake in Sandisk (SNDK).</li><li>Sandisk is trading in the when issued market at $48.26. At that share price, SNDK is trading at an EV/ annualized revenue of 1.0x and a price to annualized earnings of 9.9x.</li><li>This price looks relatively attractive given Sandisk’s NAND flash memory partner, Xioxia, is trading at 1.3x TTM revenue.</li></ul>

On February 24, 2025, Western Digital (WDC) will spin-off 80.1% of its stake in Sandisk (SNDK).Sandisk is trading in the when issued market at $48.26. At that share price, SNDK is trading at an EV/ annualized revenue of 1.0x and a price to annualized earnings of 9.9x.This price looks relatively attractive given Sandisk’s NAND flash memory partner, Xioxia, is trading at 1.3x TTM revenue.

<ul>
<li>Small caps generally trade between a 50% discount to the S&amp;P 500 and a 50% premium. The current discount is 22%.</li>
<li>Relative periods of outperformance tend to last for waves of at least 13 years.</li>
<li>The current dominance of large caps over small caps has lasted ~13 years. This suggests the cycle could be due to change.</li>
</ul>


Small caps generally trade between a 50% discount to the S&amp;P 500 and a 50% premium. The current discount is 22%.
Relative periods of outperformance tend to last for waves of at least 13 years.
The current dominance of large caps over small caps has lasted ~13 years. This suggests the cycle could be due to change.


Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

<ul><li>Western Digital Corporation delivered a mixed performance in its second fiscal quarter of 2025, reflecting both strengths and challenges across its two major business units, HDD and Flash.</li><li>Revenue reached $4.3 billion, supported by strong growth in HDD, but tempered by challenges in the Flash segment, which is facing significant pricing pressures.</li><li>On the positive side, the HDD business showed impressive results, characterized by record high revenues and strong adoption of high-capacity enterprise drives.</li></ul>

Western Digital Corporation delivered a mixed performance in its second fiscal quarter of 2025, reflecting both strengths and challenges across its two major business units, HDD and Flash.Revenue reached $4.3 billion, supported by strong growth in HDD, but tempered by challenges in the Flash segment, which is facing significant pricing pressures.On the positive side, the HDD business showed impressive results, characterized by record high revenues and strong adoption of high-capacity enterprise drives.

Western Digital Corporation: 7 Crucial Factors That Will Define Its Success in 2025 & Beyond! - Major Drivers

<ul><li>Peloton's earnings for the first quarter of fiscal 2025 demonstrate a balanced perspective of challenges and opportunities as the company maneuvers through a critical phase marked by leadership transitions and strategic realignment.</li><li>The announcement that Peter Stern will assume the role of CEO and President starting January 1, 2025, heralds a potentially transformative phase for Peloton.</li><li>Peter Stern brings substantial experience from previous roles at major corporations, likely setting a strong foundation for leadership and strategic direction.</li></ul>

Peloton's earnings for the first quarter of fiscal 2025 demonstrate a balanced perspective of challenges and opportunities as the company maneuvers through a critical phase marked by leadership transitions and strategic realignment.The announcement that Peter Stern will assume the role of CEO and President starting January 1, 2025, heralds a potentially transformative phase for Peloton.Peter Stern brings substantial experience from previous roles at major corporations, likely setting a strong foundation for leadership and strategic direction.

Peloton Interactive Inc.: Can Its Strategic Marketing & Customer Acquisition Up Their Game?  - Major Drivers

<ul><li>Peloton's Fourth Quarter Fiscal Year 2024 Earnings highlighted a period of transition and strategic transformation with promises of achieving better financial footing and long-term sustainable growth.</li><li>Peloton announced a new policy: a one-time $95 activation fee for subscribers who purchase used equipment, such as Bikes or Treads, on the secondary market.</li><li>This move comes as Peloton notices a significant rise in new members acquiring second-hand equipment from platforms like Facebook Marketplace.</li></ul>

Peloton's Fourth Quarter Fiscal Year 2024 Earnings highlighted a period of transition and strategic transformation with promises of achieving better financial footing and long-term sustainable growth.Peloton announced a new policy: a one-time $95 activation fee for subscribers who purchase used equipment, such as Bikes or Treads, on the secondary market.This move comes as Peloton notices a significant rise in new members acquiring second-hand equipment from platforms like Facebook Marketplace.

Peloton Interactive Inc: Emphasis on Hardware and Subscription Gross Margins Is A Critical Growth Catalyst!

United States

Western Digital Corporation is a global provider of solutions for the collection, storage, management, protection and use of digital content, including audio and video. The Company's products include hard drives, solid-state drives, and home entertainment and networking products.

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Western Digital (WDC US)

Sandisk Spin-off Overview

On February 24, 2025, Western Digital (WDC) will spin-off 80.1% of its stake in Sandisk (SNDK). Sandisk is trading in the when issued market at...

Richard Howe

Weekly Update (WDC, SNDK, MRP, IAC)

Small caps generally trade between a 50% discount to the S&P 500 and a 50% premium. The current discount is 22%. Relative periods of outperformance...

Richard Howe

Western Digital Corporation: 7 Crucial Factors That Will Define Its Success in 2025 & Beyond! - Major Drivers

Western Digital Corporation delivered a mixed performance in its second fiscal quarter of 2025, reflecting both strengths and challenges across...

Baptista Research

Peloton Interactive Inc.: Can Its Strategic Marketing & Customer Acquisition Up Their Game? - Major Drivers

Peloton's earnings for the first quarter of fiscal 2025 demonstrate a balanced perspective of challenges and opportunities as the company...

Baptista Research

Peloton Interactive Inc: Emphasis on Hardware and Subscription Gross Margins Is A Critical Growth Catalyst!

Peloton's Fourth Quarter Fiscal Year 2024 Earnings highlighted a period of transition and strategic transformation with promises of achieving...

Baptista Research

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