WDC: Closing out a 588% Winner

September 1, 2026

WDC: $454

Market Cap: $163BN

Total Return: +593%

Closing Out Western Digital (WDC)

I’m closing out my WDC recommendation. Not because I’ve soured on the stock, but because my “demerger arbitrage” thesis has played out, and I want to focus on other high conviction special situations.

When I first recommended WDC, it was a demerger arbitrage: we were buying ahead of the SanDisk separation, and the stock was cheap on every metric (absolute, relative and SOTP).

The breakup unlocked the value I was expecting, and the AI-driven surge in storage demand went from a tailwind I hoped for to the dominant driver of the business. The stock is up many multiples from where I recommended it.

However, today the special-situation angle is gone. There’s no pending demerger, no SOTP discount to close, no structural catalyst left to exploit.

WDC today is simply a high-quality operating company benefiting from a strong end market. It is not expensive, especially given the growth, but “reasonably valued good business” is a different proposition than “mispriced special situation.”

To be clear about what I still believe: my underlying view on the company is intact. I think WDC earns roughly $40/share within a few years, and a 20x multiple is reasonable given the oligopolistic structure of the HDD industry and the strength of AI-related demand. On those numbers the stock is not stretched. For that reason I’m personally continuing to hold my position but will use it as a source of funds for higher conviction ideas.

Disclosure/Disclaimer:

Rich Howe owns shares of Western Digital (WDC). All expressions of opinion are subject to change without notice. All published emails/articles/correspondence is provided for informational purposes. We do not warrant the completeness or accuracy of this content. Please do your own due diligence and consult with an investment adviser before buying or selling any stock mentioned on www.stockspinoffinvesting.com.