Author Topic: TDG - Transdigm  (Read 142081 times)

thefatbaboon

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Re: TDG - Transdigm
« Reply #170 on: October 14, 2015, 09:23:49 AM »
thefatbaboon: Just to be clear, I wasnt directing the volume + pricing stuff to you, im sure you are a good investor and familiar with this. There was some talking of pricing on one of the previous pages and people were thinking how much they are able to hike their prices and I think someone thought it would be somewhere around inflation or 2-3%, I just directed that comment made by Weitz funds to that discussion, I should have probably made it more clear there.

It will be interesting to see their guidance (which comes out next month) for FY16 and thoughts. Aftermarket has been a bit lumpy for last couple of years, a few quarters back they were flat for some time and then suddenly they were running extra heated year ago with aftermarket growing in high teens. Defence has also been picking up lately.

There's also some passing commentary from Nick here and there in conf calls that support Weitz and your mid single pricing.  Most recently I think Nick was pushed on it at one point in last quarter's conf call and he pretty much as good as said that there had been no volume growth in commercial aftermarket...from which one could infer that he'd increased price mid-single.  I'm not too worried about lumpiness...at the end of the day if the planes are flying at some point the inventory movements are going to average out and spares are going to get consumed.

As is probably clear from what I've written here by far my biggest concern with TDG is to develop a better understanding of regulation and a better understanding of non-regulatory based competitive advantages.


giofranchi

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Re: TDG - Transdigm
« Reply #171 on: October 14, 2015, 11:59:17 PM »
As is probably clear from what I've written here by far my biggest concern with TDG is to develop a better understanding of regulation and a better understanding of non-regulatory based competitive advantages.

Well then, has anyone a good link to post and to share with other board members interested in TDG about the history of government intervention in the aerospace industry?

Thank you!

Gio
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Schwab711

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giofranchi

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Schwab711

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Re: TDG - Transdigm
« Reply #175 on: October 26, 2015, 06:23:53 AM »
https://www.faa.gov/regulations_policies/handbooks_manuals/aircraft/amt_handbook/media/FAA-8083-30_Ch12.pdf

Check the "strategies" forum for the history of the airline industry and regulations.

NewbieD

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Re: TDG - Transdigm
« Reply #176 on: October 26, 2015, 06:33:38 AM »
Company looks interesting.

Any thoughts on if Transdigms profitbability could be reduced due to 3d-printing competitors?
http://nordicinvestor.net/2015/10/19/arcam-ceo-expects-aerospace-boom-3d-printing/


big_triece

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Re: TDG - Transdigm
« Reply #177 on: October 26, 2015, 10:57:57 AM »
Company looks interesting.

Any thoughts on if Transdigms profitbability could be reduced due to 3d-printing competitors?
http://nordicinvestor.net/2015/10/19/arcam-ceo-expects-aerospace-boom-3d-printing/

I don't think it's a huge threat. For a part to go onto an airplane, it has to receive FAA approval, which is both costly and time consuming. Established companies with a proven safety history and knowledge of navigating the regulatory approval process have big advantages. Especially in the case of a company like TDG because they are so often the sole-source provider. It would take a lot for an airline to choose an unproven part with a new manufacturing process over a proven component from a reputable long-term provider. If anything, I think TDG could utilize the 3d printing technology more to their advantage.

rishig

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Re: TDG - Transdigm
« Reply #178 on: October 26, 2015, 11:51:37 AM »
Companies run by Outsider CEOs are great ones to invest in. But ignoring the framework of value investing is dangerous - as seen in Valeant, Colfax. Great company at a bad price removes the margin of safety element. It is hard to tell in foresight all the things that can go wrong - end markets are cyclical and cycle turns (Colfax), regulatory risks (Valeant).

Who knows all the things that can go wrong with Transdigm. Just because nothing has gone wrong doesn't mean it won't. At current valuation, in my opinion, the margin of safety is small to protect from the unknown unknowns. The same applies to Constellation Software.

Liberty

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Re: TDG - Transdigm
« Reply #179 on: October 26, 2015, 11:54:02 AM »
Companies run by Outsider CEOs are great ones to invest in. But ignoring the framework of value investing is dangerous - as seen in Valeant, Colfax. Great company at a bad price removes the margin of safety element. It is hard to tell in foresight all the things that can go wrong - end markets are cyclical and cycle turns (Colfax), regulatory risks (Valeant).

Who knows all the things that can go wrong with Transdigm. Just because nothing has gone wrong doesn't mean it won't. At current valuation, in my opinion, the margin of safety is small to protect from the unknown unknowns. The same applies to Constellation Software.

Hi Rishi,

Do you consider your investments in MA/V (I don't remember if you own both or just MA) and PCLN, as well as GOOGL (I assume), to be exceptions? They don't seem to be particularly cheap.
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