Loomis Sayles, a prominent investment management firm, recently released its "Small Cap Value Fund" second-quarter 2025 investor letter. The letter highlights the fund’s performance and key investment decisions during the quarter. Notably, the fund delivered a return of 5.40%, outperforming the Russell 2000(R) Value Index, which returned 4.97%. This outperformance was attributed to positive allocation effects across multiple sectors. For a deeper dive into the fund's strategy, investors can review its top five holdings, which showcase its best-performing picks of 2025.

One of the key highlights of the letter was the fund's decision to exit its position in Sandisk Corporation (NASDAQ:SNDK), a leading data storage and solutions company specializing in NAND flash technology. Sandisk has been a notable player in the consumer electronics market, providing flash memory solutions for a wide range of devices.

Sandisk Corporation (NASDAQ:SNDK) has seen impressive stock performance in recent months. The company's one-month return stood at 30.28%, while its shares gained 35.51% over the last three months. On September 3, 2025, Sandisk's stock closed at $53.01 per share, giving the company a market capitalization of $7.729 billion.

Despite this strong performance, Loomis Sayles decided to exit its position in Sandisk. The fund initially invested in the company based on expectations of a cyclical recovery in its end markets. However, the potential negative impact of tariffs on the consumer electronics market and data storage prices led the fund to reassess its investment thesis.

In its investor letter, Loomis Sayles explained its rationale for exiting Sandisk:
"Sandisk Corporation (NASDAQ:SNDK) is a leading manufacturer of flash memory data storage primarily for consumer electronic devices. The recent investment was predicated on a cyclical recovery in the company's end markets. However, the potential negative consequences of tariffs on the consumer electronics market and data storage prices were determined to be an investment thesis break. As a result, we exited our relatively small position after a modest rally in the stock off the early April price level."

This decision underscores the fund's disciplined approach to investment management, prioritizing long-term value and risk mitigation over short-term gains.

Sandisk Corporation is not currently listed among the 30 most popular stocks among hedge funds. However, it remains a notable holding, with 49 hedge fund portfolios including the stock at the end of the second quarter, up from 44 in the previous quarter. While Sandisk has demonstrated strong potential, Loomis Sayles and other investors are increasingly turning their attention to AI stocks, which are perceived to offer greater upside potential and lower downside risk.

In particular, AI stocks that stand to benefit from Trump-era tariffs and the onshoring trend are gaining traction among investors. These stocks are seen as undervalued opportunities with significant growth potential in the evolving global economic landscape.

Loomis Sayles' decision to exit Sandisk Corporation highlights the importance of adapting investment strategies to changing market conditions. While Sandisk has shown strong recent performance, the fund's focus on mitigating risks associated with tariffs and market volatility led to its exit. As the investment landscape continues to evolve, Loomis Sayles remains committed to identifying opportunities that align with its long-term value-driven approach.

The post Loomis Sayles Small Cap Value Fund Exits Sandisk Corporation (SNDK) Due to Investment Thesis Break appeared first on PRISM MarketView.

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