What are you buying today?

[LC]

1 hour ago, Castanza said:

ABNB, NVO, EADSY

 

What's your elevator pitch on Airbus?

[Castanza]

48 minutes ago, LC said:

 

What's your elevator pitch on Airbus?

 

High level:

 

Less leverage and generally better operators. I think their fleet and future fleet meets market needs better than Boeing. I think we will see diversification from US (Boeing) long-term (speak of the Devil ). I think it's fairly priced, which is why I haven't sized it up to a full position yet, but I think with the backlog and contracts in place (assuming escalation cost clauses are the norm) we should see continued growth. 

 

Air travel will grow quite a bit as more areas open. I think the duopoly structure will remain long term but short term might see some movement away from Boeing. Carriers and logistics companies need planes. There is a shortage globally for various reasons so long-term I see pricing power, demand growth and recuring revenue. 

 

I think any issues will be smoothed out over time and frankly with a 10+ year horizon I don't care all that much what they are now. Right now Airbus is the better operator. I think they managed the last supply chain issues, shortages, and production (quality, quantity, contacts) better than Boeing. 

[tnathan]

Some UNH ... i think the decline is too much esp given the uncertainty w other sectors today

[Dinar]

@LCand @Castanza, my pitch on Airbus is as follows: India, Vietnam, China, Indonesia, Latin America and Africa will get richer.  As people get rich, they want to travel.  If India by itself gets the same number of planes per capita as US and Western Europe, global volumes will triple.  As volumes go up, you get economies of scale in manufacturing, R&D, etc...  In addition, they can squeeze suppliers like TDG (why do you have 50% EBITDA margins and I have 15-20%) to share after-market economics, which was Boeing's plan a few years ago.  My guess is that over the next two decades, the number of planes that Airbus produces will go up by a factor of 2-3x, EBIT margins will go from 10% in 2026 and 9% in 2025 to 18-20% in 2030-33.  Keep in mind, the company is financed by its customers - negative working capital.  And it is trading at 16.5x 2026 EPS, and even lower multiple of free cash flow.  For a net cash company (granted this is due to negative working capital), where I expect volumes to rise at 5-7% per annum for many decades, EBIT margins to expand from 9% to 18-20, and free cash flow to exceed net income, this pretty damn good.  Oh, and it is a duopoly.  Now it is just a 4.5% position for me, since I already own Safran, GE & TDG.  In total, my aerospace bucket is 20% of the portfolio.  If I did not have to worry about taxes, today I would size Airbus at 10%, Ge & safran at 3-4% each, and TDG at 2-3%.  

[thepupil]

19 minutes ago, Dinar said:

@LCand @Castanza, my pitch on Airbus is as follows: India, Vietnam, China, Indonesia, Latin America and Africa will get richer.  As people get rich, they want to travel.  If India by itself gets the same number of planes per capita as US and Western Europe, global volumes will triple.  As volumes go up, you get economies of scale in manufacturing, R&D, etc...  In addition, they can squeeze suppliers like TDG (why do you have 50% EBITDA margins and I have 15-20%) to share after-market economics, which was Boeing's plan a few years ago.  My guess is that over the next two decades, the number of planes that Airbus produces will go up by a factor of 2-3x, EBIT margins will go from 10% in 2026 and 9% in 2025 to 18-20% in 2030-33.  Keep in mind, the company is financed by its customers - negative working capital.  And it is trading at 16.5x 2026 EPS, and even lower multiple of free cash flow.  For a net cash company (granted this is due to negative working capital), where I expect volumes to rise at 5-7% per annum for many decades, EBIT margins to expand from 9% to 18-20, and free cash flow to exceed net income, this pretty damn good.  Oh, and it is a duopoly.  Now it is just a 4.5% position for me, since I already own Safran, GE & TDG.  In total, my aerospace bucket is 20% of the portfolio.  If I did not have to worry about taxes, today I would size Airbus at 10%, Ge & safran at 3-4% each, and TDG at 2-3%.  

 

That sentence is doing a lot of work given the middle 40% of India makes $2K-$3K/yr and air trips per capita is 1/5 of China and 1/30th of the US.

 

I don't think anyone denies that aerospace is growing at > GDP, but on what time horizon would one expect Indians to travel as much as americans/europeans. 30 years? 50 years? 75 years? never? 

 

https://www.bain.com/insights/air-travel-forecast-interactive/

 

the big brains at Bain predict global air travel in 2030 will be 136% of 2019 volume, for whatever that is worth. that's 3.1%/yr

 

Quote

Here is the outlook as of the end of the first quarter of 2025:

• Annual air travel demand returned to prepandemic levels last year, surpassing the 2019 total as measured by revenue passenger kilometers (RPK)—the number of paying passengers multiplied by the total distance traveled. Last year’s demand was in line with expectations, reaching 102.6% of 2019 value (see Figure 1 above). By 2030, we anticipate global RPK will reach 11.3 trillion in our base scenario, which would be 136% of 2019 volume. Meanwhile, several factors have contributed to changes in the forecasts for specific regions and countries (see Figures 2 and 3).
• Weaker-than-expected demand in the US and Mexican domestic markets lowered the 2030 outlook for North American intraregional travel demand by 2 percentage points vs. the previous quarter. This is equivalent to a $2.3 billion revenue decrease at current yields.
• We continue to anticipate significant intraregional demand growth in Asia—a 53% increase from 2019 to 2030.
• Looking at specific countries, by 2030 the US is positioned to surpass the UK as the world’s largest market for outbound international travel, thanks to a substantial increase of 21 million travelers from 2024 to 2030.
• With an increase of more than 26 million travelers, China is on track to reclaim its position as the third-largest outbound travel market by 2030, recovering from a dip to seventh place in 2024. India’s robust growth trajectory puts it on pace to rise to ninth-largest outbound travel market, with particular gains in long-haul travel.
• Europe will continue to claim several of the top short-haul outbound markets in 2030: the UK (69 million short-haul outbound travelers forecasted), Germany (47 million), and Spain (40 million).

 

Edited April 17, 2025 by thepupil

[Xerxes]

1 hour ago, thepupil said:

 

That sentence is doing a lot of work given the middle 40% of India makes $2K-$3K/yr and air trips per capita is 1/5 of China and 1/30th of the US.

 

I don't think anyone denies that aerospace is growing at > GDP, but on what time horizon would one expect Indians to travel as much as americans/europeans. 30 years? 50 years? 75 years? never? 

 

https://www.bain.com/insights/air-travel-forecast-interactive/

 

the big brains at Bain predict global air travel in 2030 will be 136% of 2019 volume, for whatever that is worth. that's 3.1%/yr

 

 

 

 

i ll answer on Dinar’ behalf. 
 

Whilst it is true that the domestic market in India is slow to grow (GDP per capita and all), but there is low hanging fruit up for grab:

 

there is a lot of Indian traffic that use Emirates and other Gulf super-connectors to fly to the U.S. and Europe. That market share is up for grabs by IndiGO and Air India. 
 

Dubai may have had infrastructure and the wherewithal to be first in the market, but there is nothing stopping the likes of Bangalore to become an international hub for India super-connector, first for India travellers (that already use the Gulf carrier) and then for foreigners. 
 

 

[Xerxes]

1 hour ago, Dinar said:, my pitch on Airbus is as follows: India, Vietnam, China, Indonesia, Latin America and Africa will get richer.  As people get rich, they want to travel.  If India by itself gets the same number of planes per capita as US and Western Europe, global volumes will triple.  As volumes go up, you get economies of scale in manufacturing, R&D, etc...  In addition, they can squeeze suppliers like TDG (why do you have 50% EBITDA margins and I have 15-20%) to share after-market economics, which was Boeing's plan a few years ago.  My guess is that over the next two decades, the number of planes that Airbus produces will go up by a factor of 2-3x, EBIT margins will go from 10% in 2026 and 9% in 2025 to 18-20% in 2030-33.  Keep in mind, the company is financed by its customers - negative working capital.  And it is trading at 16.5x 2026 EPS, and even lower multiple of free cash flow.  For a net cash company (granted this is due to negative working capital), where I expect volumes to rise at 5-7% per annum for many decades, EBIT margins to expand from 9% to 18-20, and free cash flow to exceed net income, this pretty damn good.  Oh, and it is a duopoly.  Now it is just a 4.5% position for me, since I already own Safran, GE & TDG.  In total, my aerospace bucket is 20% of the portfolio.  If I did not have to worry about taxes, today I would size Airbus at 10%, Ge & safran at 3-4% each, and TDG at 2-3%.  

I disagree just on the point of Airbus doing what Boeing did on Aftermarket. 
 

Not going to happen in my view. All hands on deck on getting the narrow body rate to +70 per month. And dealing with Airbus’ work packages coming from Spirits Aerosystems.  
 

They won’t make the mistake that Boeing made by distracting themselves by building up an Aftermarket business. Maybe later, while dropping the ball on the main business. 

[Luke]

I sold a lot of Fairfax and added proceeds to PDD and TSMC

[gfp]

8 minutes ago, Luke said:

I sold a lot of Fairfax and added proceeds to PDD and TSMC

 

Fairfax is not for selling.  Surely you have something crappier to sell if you need cash luka 

[Dinar]

30 minutes ago, Xerxes said:

I disagree just on the point of Airbus doing what Boeing did on Aftermarket. 
 

Not going to happen in my view. All hands on deck on getting the narrow body rate to +70 per month. And dealing with Airbus’ work packages coming from Spirits Aerosystems.  
 

They won’t make the mistake that Boeing made by distracting themselves by building up an Aftermarket business. Maybe later, while dropping the ball on the main business. 

I was sloppy, so did not get my point across correctly.  What I meant was when it comes time to design the new aircraft, which will enter service say in 15 years, Airbus is going to say to the supplier: do you want to be on it?  Okay, then let's have profit sharing on after-market, if say your EBIT margins are over 20%, then 50% of the excess goes to you and 50% to us.  

[Luke]

40 minutes ago, gfp said:

Fairfax is not for selling.  Surely you have something crappier to sell if you need cash luka 

I am happy to buy it back again. PDD is so ridiculously cheap and TSMC is qualitatively a way higher asset growing way faster and valuation also not too far off from FFH Cheers! 

[Haryana]

5 hours ago, kh812000 said:

You're right.  We should all be fully invested in the equity market right now. 

 

BTW Gold btw has outperf SPY over the last 5 yrs! 

 

https://www.crisisinvesting.com/p/gold-vs-the-s-and-p-500

[Paarslaars]

Yeah but the political risk has gotten much higher recently... I'm staying out until this blows over.

[Eldad]

3 hours ago, Dinar said:

@LCand @Castanza, my pitch on Airbus is as follows: India, Vietnam, China, Indonesia, Latin America and Africa will get richer.  As people get rich, they want to travel.  If India by itself gets the same number of planes per capita as US and Western Europe, global volumes will triple.  As volumes go up, you get economies of scale in manufacturing, R&D, etc...  In addition, they can squeeze suppliers like TDG (why do you have 50% EBITDA margins and I have 15-20%) to share after-market economics, which was Boeing's plan a few years ago.  My guess is that over the next two decades, the number of planes that Airbus produces will go up by a factor of 2-3x, EBIT margins will go from 10% in 2026 and 9% in 2025 to 18-20% in 2030-33.  Keep in mind, the company is financed by its customers - negative working capital.  And it is trading at 16.5x 2026 EPS, and even lower multiple of free cash flow.  For a net cash company (granted this is due to negative working capital), where I expect volumes to rise at 5-7% per annum for many decades, EBIT margins to expand from 9% to 18-20, and free cash flow to exceed net income, this pretty damn good.  Oh, and it is a duopoly.  Now it is just a 4.5% position for me, since I already own Safran, GE & TDG.  In total, my aerospace bucket is 20% of the portfolio.  If I did not have to worry about taxes, today I would size Airbus at 10%, Ge & safran at 3-4% each, and TDG at 2-3%.  

The airplane play seems to be very popular. Just in general everyone seems to like HEI, RTX, etc. for like the past three years. 
 

India, Africa, Developing world middle class rising works for almost every international business. What is currently in a temporary decline like Air was 4-5 years ago? I can still see TDG on my screen for $300-$400~ in 2020 and me thinking it had too much debt. Uggggh. 
 

Otis, Kone is similar but not at all cheap. Maybe someday. 

[Dinar]

@Eldad, I disagree re Otis and one.  Much less growth and service is a very competitive market

[Eldad]

6 minutes ago, Dinar said:

@Eldad, I disagree re Otis and one.  Much less growth and service is a very competitive market

Yeah, maybe so. I like that the general consensus is for lower growth on new elevators going forward. Clearly that will be false if India, Africa, etc. have China like development in the future. But the prices don’t reflect that lower growth because they are crushing it on maintenance margins currently. 

[Kizion]

11 hours ago, Haryana said:

 

https://www.crisisinvesting.com/p/gold-vs-the-s-and-p-500

 

"If you own an ounce of gold now and you caress it for the next hundred years, you'll have an ounce of gold 100 years from now. If you own 100 acres of farmland, you'll also have 100 acres of farmland 100 years from now, and you'll have taken the crops for 100 years and sold them and presumably bought more farmland with the proceeds. It is very hard for an unproductive investment to beat productive investments over any long period of time."

 

"We would much prefer some asset that is going to be useful whether the currency is worth what it is today or 10% of what it is today... We would not trade the ownership of those kinds of assets for a hunk of the yellow metal which has very little real utility"

 

https://www.youtube.com/watch?v=ETzvS2g8LC4

I'm just not smart enough to be critical on those arguments. 

[Spekulatius]

Bought a bit more PBR-A in my tax deferred accounts. I like to recycle the dividends I receive into more shares at opportune times.

[sleepydragon]

3 hours ago, Kizion said:

 

"If you own an ounce of gold now and you caress it for the next hundred years, you'll have an ounce of gold 100 years from now. If you own 100 acres of farmland, you'll also have 100 acres of farmland 100 years from now, and you'll have taken the crops for 100 years and sold them and presumably bought more farmland with the proceeds. It is very hard for an unproductive investment to beat productive investments over any long period of time."

 

"We would much prefer some asset that is going to be useful whether the currency is worth what it is today or 10% of what it is today... We would not trade the ownership of those kinds of assets for a hunk of the yellow metal which has very little real utility"

 

https://www.youtube.com/watch?v=ETzvS2g8LC4

I'm just not smart enough to be critical on those arguments. 

Not sure about GLD, though it’s gone parabolic recently.

i bought some silver. Silver has sustained demand -supply deficits. 

[Paarslaars]

3 hours ago, Kizion said:

 

"If you own an ounce of gold now and you caress it for the next hundred years, you'll have an ounce of gold 100 years from now. If you own 100 acres of farmland, you'll also have 100 acres of farmland 100 years from now, and you'll have taken the crops for 100 years and sold them and presumably bought more farmland with the proceeds. It is very hard for an unproductive investment to beat productive investments over any long period of time."

 

"We would much prefer some asset that is going to be useful whether the currency is worth what it is today or 10% of what it is today... We would not trade the ownership of those kinds of assets for a hunk of the yellow metal which has very little real utility"

 

https://www.youtube.com/watch?v=ETzvS2g8LC4

I'm just not smart enough to be critical on those arguments. 

Plus past performance is not indicative of future performance. Especially considering disrupting technology like BTC entering gold's territory as a store of value.

[Kizion]

3 minutes ago, Paarslaars said:

Plus past performance is not indicative of future performance. Especially considering disrupting technology like BTC entering gold's territory as a store of value.

 

We're going off-topic here, so sorry for that. 

I don't believe in BTC neither - for me it's, just as gold, an unproductive asset. I guess both value of gold & BTC (if it remains relevant) will increase over time thanks to increase of money supply. But they remain unproductive asset, and therefore I guess the return will be lower vs. productive assets (unless valuation of productive assets today is significantly overvalued and valuation of gold/BTC is signficantly undervalued - however I can only value productive assets and not unproductive ones). 

[cwericb]

15 hours ago, Haryana said:

 

https://www.crisisinvesting.com/p/gold-vs-the-s-and-p-500

 

Just wondering what shares in Fairfax (FFH.TO) would look like on that chart?

 

[Milu]

20 minutes ago, Kizion said:

 

We're going off-topic here, so sorry for that. 

I don't believe in BTC neither - for me it's, just as gold, an unproductive asset. I guess both value of gold & BTC (if it remains relevant) will increase over time thanks to increase of money supply. But they remain unproductive asset, and therefore I guess the return will be lower vs. productive assets (unless valuation of productive assets today is significantly overvalued and valuation of gold/BTC is signficantly undervalued - however I can only value productive assets and not unproductive ones). 

While I agree that when given the choice productive assets are likely better than unproductive assets. In reality though unless you are 100% invested at all times you will generally end up with a portion of your net worth in cash. The decision then becomes whether to invest your cash in productive assets at high prices (in the case of a highly valued market) or hold your cash in t-bills(like Buffett does) while you wait for valuations to get more reasonable. The main risk with that though is to potential to have your cash inflated away meaning you are losing purchasing power each year you sit in t-bills. What are the alternatives, perhaps instead of having all your cash in t-bills you might consider diversifying into places like gold (5000 years as a store of value) or possible Bitcoin (the new upstart). 

[gfp]

16 hours ago, Haryana said:

 

https://www.crisisinvesting.com/p/gold-vs-the-s-and-p-500

 

 

Wouldn't this be right up there as a grade A chart crime?  I started my professional investing career in 2000-2001 and as we all know it was a huge blow-off top in equities and a major low before the beginning of a huge bull market in gold.  By selecting the year 2000 as a starting point, they are selecting opposite extremes for both assets.

 

People who try to convince or win arguments with stuff like this are being intellectually dishonest at best

[Blake Hampton]

I’m not a huge fan of gold, but central banks around the world are buying record amounts of it. I think you’d be better off with certain types of equities or real estate, but I also think that central bankers are generally pretty smart when it comes to money.

 

Bitcoin is a hard pass though.

 

Edited April 18, 2025 by Blake Hampton