Xerxes

General Dynamics had G800 certification were in focus this quarter; not a reason for it being down but a factor. The submarine shipyards, if anything is constrained in the next years between commitment made to AUKUS and delivery profile for its main customer. Not sure what DOGE is going to do there. Metal bashing needs metal bashing. Comments on conference call: Phebe Novakovic So taking the inverse order, some of -- we have worked out with our suppliers some consideration and -- but not anything that I think is too material. But let's talk about the 800. So we expect the 800 certification sometime in the first half. And -- and we think we have worked our way through the most significant problems on the 7 -- that we experienced on the 700. Remember the commonality of part almost identical between the 800 and the 700. So we think the learning that we achieved on the 700 will be very advantageous on the 800. And our objective here is to deliver a fewer -- have expectations to deliver fewer 800s. So think of -- than we did 700. So think about it this way. For 2025, we're thinking about a combination of G650s and 800s. It's about equal to give or take, a few airplanes, the number of G650s we delivered. So we think a lot of the challenges are behind us. Lockheed Martin had a (unplanned)charges on two of its black program (i.e. classified); not the first time there is an accounting charge. There was another couple of years ago. Don't expect this to be a recurring charges like KC46 tanker program at Boeing. I believe (w/ no evidence) that at some point Lockheed would need to get back to the commercial market. They took a step in diversifying their portfolio when they bought Sikorsky from UTC for $9B, but there is a lot of defense exposure there as well. Perhaps they could make a bid for the family-owned Canadian Bombardier Aerospace, and go toe to toe with General Dynamics. It was widely reported in late 2024 that ULA is also on the block. Not sure who will buy that, or if Lockheed will double down (surely a mistake) and buy Boeing's 50% stake. All speculation. Comments on conference call: Jay and Maria will cover the financials in more detail. but I'd like to briefly comment on the earnings impact in the fourth quarter of 2 classified programs at MFC and Aeronautics, respectively. Recording charges in Q4 on these two programs enabled us to derisk the financial profile of both these critical national security programs going forward as we move into their next phases. While these particular contracts were struck a number of years ago, there are no longer any must-win competitions. Under today's Lockheed Martin wide bid process, every proposal adheres to a stringent, risk-adjusted ROI regime. This process is designed to compete aggressively for key opportunities, while also being very committed to achieving positive results, both in the short and long term for our shareholders. ---- For purposes of understanding the total impact on our full year results, I'll direct your attention to the middle section of the chart. We recorded net charges of $1.8 billion as follows. $1.4 billion related to the remaining expected future losses on the MFC classified program, and $555 million associated with the Aeronautics classified program. With these amounts partially offset by $155 million benefit associated with our C5 claim resolution. Relative to our prior outlook, we recorded $1.4 billion of unplanned net charges, consisting of $410 million for the Aeronautics classified program, $1.1 billion from the MFC classified program, with these amounts partially offset by $70 million of unplanned benefit from the C5 claim resolution. As far as juvenile jokes from Elon Musk about displacing F35 with a fleet of drones; you need to tell me how deterrent a fleet of cheap drones are going to be in the pacific theatre. Here is a comment about the recent performance of Israeli F-35 in an actual combat. And then the last thing I'll say is that there's -- based on, again, open source reporting. The experience of the Israeli Air Force against the Iranian air defense system, which they took out in one night with what they characterize as fifth-generation aircraft, and you can match up what's in their inventory, with no losses. That would clear the way for fourth-gen aircraft, drones to come in and devastate that country if the Israelis decided to do so. That's the kind of impact that the high-end platforms have, especially if you can network satellite imagery, autonomous vehicle, drone imagery and a companion to control speed that no one else can muster. You can have that kind of lopsided victory. And that's another reason I think that the F-35 is going to demonstrate its value here, through the Israeli experience. So between the juvenile jokes from Elon Musk and surprise charges against its earnings, the stock had to go down. We know one thing for sure the CEO follows free cash flow per share as his key KPI. The same KPI he was using when leading American Towers. Our financial focus remains on free cash flow and free cash flow per share. Our company continued to deploy significant free cash flow in 2024 and we've returned greater than 100% of that free cash flow to you, the shareholders. In addition to our consistent and healthy dividend, we maintained a robust share repurchase program, with $3.7 billion of shares repurchased in 2024. Transdigm had share repurchase activities in the last quarter. About $316 million were deployed. Not a big number but given that Transdigm very rarely does share repurchase it may have helped it a bit. Last repurchase was $912 million in 2022, before the stock took off. The company does have a third of its revenue from the defense sector, and i think compared to the major primes it is mostly in lower value item. Does that (1) help or (2) hinder it hiding from the Eye of DOGE. (1) DOGE wanting to focus on major primes (2) DOGE going after easy lower hanging fruits for show Additionally, we had strong operating cash flow generation in Q1 of over $750 million and ended the quarter with almost $2.5 billion of cash. We expect to steadily generate significant additional cash throughout the remainder of 2025. Next, an update on our capital allocation activities and priorities. During Q1, we opportunistically deployed just over $300 million of capital via open market repurchases of our common stock. This equates to approximately 250,000 of our shares at an average price of $1,249 per share. We view these repurchases like any other capital investment and expect this will meet or exceed our long-term return objectives. -- Most international markets saw stable growth with Asia Pacific, the major driver of the increase. Shifting to our defense market, which is traditionally is at or below 35% of our total revenue. The defense market revenue, which includes both OEM and aftermarket revenues, grew by approximately 11% compared with the prior year period. Q1 defense revenue growth was well distributed across our businesses and customer base. We saw similar growth in both the OEM and aftermarket components of our total defense market. with the aftermarket running slightly ahead of OEM. RTX too me is the best in class in terms of broad exposure. One of the most overlooked side of RTX, is the Collins Aerospace business. Most people either focus on Raytheon or Pratt & Whitney when talking about the company. Collins Aerospace is the RTX subsidiary brand that started with Hamilton-Sundtrand, but has since rolled-up Goodrich, Rockwell Collins (which itself had bought B/E Aerospace). They do avionics, interiors, landing gears, nacelles, you name it. Folks often talk about how RTX's P&W is limited only to narrow-body and A.320 family, but they forget that RTX's other business (Collins Aerospace) has a lot of exposure to wide-body and the Boeing side of narrow body market: B.737. All be it small. This is from Sept last year. But I thought it was good listen. RTX - 1685813 Note, this summer the Air Show will be in Paris. It switches between France and UK every other year. RTX does a Investor Meeting every two years when it is in Paris. Last one was in summer of 2023 that was soon followed by the engine issues. Since then they have been handling the issue and used the opportunity to repurchase a big chunk of its own shares. I believe that opportunistic accelerated share repurchase program in 2022 has captured all the share buyback they wanted to do as per their commitment in Paris in 2023. So we will see what they have to say in 2025 in summer in terms what's coming next.

RBC Direct Investing. No brainer. you get the international markets. only Canadian broker that offers that.

Thanks. One more from master of coin.

I am actually really curious as to the men and women advising Trump on SWF and seeding it with TikTok. Right or wrong, there must be some high level thinking (not being sarcastic here) behind all the chaos and high-VIX press releases. Like to know the architects.

Well, that would explain why a nation armed with what the French called privilège exorbitant of having a reserve currency + a structural trade deficit needs a SWF: Illiquid assets like TikTok, certain Riviera in the near east filled with condominiums and beachfront properties plus Bitcoin need to long term runway to get the compounding machine going. It would not makes sense to liquidate in the short term to offset part of the national debt.

Right … Tik Tok and a certain Riviera in the near east could be great foundational long term investment bedrock for the SWF PIF has the Neom, so….

The video is not about SWF but about the original tariff man. And how at some point they “had” to get rid of surplus. That is history. If there is a more to the tariff than it being simply a negotiating tool, if there is real conviction in the White House that it is a permanent tool to increase revenues, (not just to arm wrestle other trading partner), than those future cash pile have to go somewhere, if not earmarked for debt reduction. why would they not go for debt reduction ? No clue. Not everything has to make sense right away. Couple that with bitcoin reserve aspirations (as unlikely as it seems). Wouldn’t those be place in this so called SWF as well. I don’t know the history of SPR well but I imagine when it was first envisioned during the Arab oil embargo, the idea that US had to “save” up expensive barrels during the time when demand was really high seem absurd. like I said not everything has to make sense right away.

Thank you John. I got a few more books to post. Couple of them I finished during my trip. Will do so in a little while.

haha. you got to work on your French. https://www.cdpq.com/fr/a-propos/histoire Established the 1960s. Currently $C450 billion in assets. I should clarify that pension fund and sovereign fund serve different purpose. So my initial statement that stated that QC has a large fund despite not being a net energy exporter is erroneous.

We had some great chats there. Hahaha but no not for faint of heart

I have bought this one just last week, after the topic rekindle my interest on JARDINE Matheson thread. Another brook is Kings of Shanghai, there is a thread in the Book section. There is also two more book recommendation in that thread. There are James Clavell novels. The Asian Saga. That covers the opium war and Hong Kong to a certain degree. There is a thread in the Book section. it is said that Robert Elegant’s third book did for Hong Kong, what James Clavell did for Japan with Shogun. I have this book and have not read it yet.

From Gemini: The Public Investment Fund (PIF) of Saudi Arabia has undergone a significant transformation in the past 10 years, particularly since 2015, when Crown Prince Mohammed bin Salman became the de facto ruler. Here's a breakdown of how PIF assets have been built: 1. Shift in Investment Strategy: * From Domestic to Global: Initially focused on domestic investments, the PIF has diversified its portfolio significantly, with increasing investments in international markets. * Focus on Strategic Sectors: The fund has targeted investments in sectors aligned with Saudi Arabia's Vision 2030 plan, including technology, renewable energy, entertainment, and tourism. * Active Investment Style: PIF has moved from passive holdings to more active investments, including taking significant stakes in companies and participating in their management. 2. Key Investment Categories: * Giga-Projects: PIF is the primary investor in massive domestic projects like NEOM, a futuristic city, and other infrastructure developments aimed at diversifying the Saudi economy. * International Strategic Investments: These include stakes in companies like Uber, Lucid Motors, and investments in sectors like technology, entertainment (e.g., LIV Golf), and sports (e.g., Newcastle United Football Club). * International Diversified Pool: A portfolio of listed and unlisted investments across various asset classes and geographies. * Sectoral Investments: Investments in specific sectors like renewable energy (e.g., ACWA Power), mining (e.g., Ma'aden), and healthcare. 3. Funding Sources: * Government Transfers: The Saudi government has injected substantial funds into the PIF. * Asset Transfers: Transfer of state-owned assets, including stakes in Saudi Aramco, to the PIF. * Investment Returns: Profits from the fund's investments are reinvested to further grow the asset base. * Borrowing: The PIF has also raised debt through green bonds and other instruments to finance its investments. 4. Transparency and Governance: * Increased Transparency: Compared to its earlier years, PIF has improved transparency by publishing annual reports and disclosing some of its investments. * Governance Structure: The fund has a board of directors and a clearly defined investment strategy, though concerns about the level of control by the Crown Prince remain. 5. Impact and Challenges: * Economic Diversification: PIF's investments are crucial to Saudi Arabia's efforts to reduce reliance on oil and build a more diversified economy. * Global Influence: The fund's growing international presence has increased Saudi Arabia's global economic and political influence. * Controversies: Some investments, particularly in sports, have faced criticism due to concerns about human rights and "sportswashing." * Investment Risks: As with any large investment fund, PIF faces risks related to market fluctuations, geopolitical events, and the success of its chosen investments. In summary, the PIF has rapidly grown its assets in the past 10 years through a combination of strategic investments, government support, and a shift towards a more active and global investment approach. This has positioned the fund as a major player in global finance and a key driver of Saudi Arabia's economic transformation.

Caisse de dépôt et placement du Québec (CDPQ) was created decades ago and the province is not an energy superpower with a lots of surplus. it was just wise governmental decision, to see that through. On SWF U.S., not much to go with, but the notion that SWF only makes sense for large net energy exporters with a bundle of USD is probably not a good foundation for pushbacks. I have a few articles that I saved on PIF. I am not sure how Saudi Arabia has been managing its vast wealth in the past 40 years, aside social programs. But unlike Qatar, UAE, the Saudi sovereign fund is relatively new. And a lot of its assets were seeded either through asset transfer from Aramco, (I recall a refinery was transferred to PIF) and cash injections from the government. So asset transfer from Federal Government would probably be the way it would get built up. Either way I like the initiative.

we should create a like carbon credit market for “bans” where you can invest and build political capital through good posts that get votes, and then can just to “use up” that political capital to write something totally outlandish politically without incurring a ban.

We should be allowed to same here. it is weird to know the dark geopolitical thoughts of otherwise brilliant investors. rather not know

Wait a minute, ….. there is a “ban” to discuss US politics …. BUT no ban when discussing and throwing around random comments (positive and negative, factual and fiction) about Russia, middle east and Ukraine. How is that fair and logical

I meant to post this few months ago and create a dedicated thread on sovereign funds. Forgot. I guess this thread is a good home for it.

IAC

sorry for late reply. I was busy doing my civic duties on the tariff thread. on GM. I own it. Originally based on the fact that they were selling off and shrinks their global footprint and their investment in developing EV platform, in contrast to Ford. of course the thesis probably changed with the new administration.

Air Canada will be in 20% category

For Canadians who are all gung-ho, be careful with the boycotts. Support our locals when you can (and have a choice) but don’t boycott American consumer brands and businesses, just because they have an American brand. I see lists going on social media. Franchises have Canadian employees and local owners. Who cares if the corporate headquarters is in the U.S.

Trump did for Canada what our leaders failed to do. He united the country !

Time is being wasted here. I caught up with the new posts. Same stuff. Seriously … This is like having a thread on a Ukrainian-Russian forum about the invasion in Feb 2022, where one side is so determined to make the point that there are Nazi in Kiev. Therefore a full scale invasion is needed to de-Nazify and restore the empire. The truth is always the first victim. There are average Ivans in Moscow, as they are average Mohammadans in Cairo as they are average Joe’ in the mid-West, just repeating the “Party line”. Nationalism has taken over common sense. So be it. The back and forward is non value added. If President Trump had said there should be tariffs on the imports from the Moon, the crowd would be all-in and would making YouTube videos, and writing essays why it makes perfect sense. Take them at their word: When a sovereign power openly talks about annexation and economic subjugation of another sovereign power, take them at their word. Where is our wartime prime minister ?

We don’t need to, system equilibrium will be reached by PRC reaching out to us, as they would see a fissure in the North Atlantic alliance to exploit (usually magnified more than it really is) … coupled with Trudeauexit, would mean a nice reset opportunity

ideology trumps economics