what are you selling today?

[frommi]

More BTI, down to a 2% position now. Reduced tobacco from 35% of the portfolio to 4% over the past 2 months. 
As always probably too early, but better safe than sorry.

[Spekulatius]

Reducing $VNT and $ADM. Both worked fairly well.

[MxMI17]

Sold completely out of $BABA for a small profit. Finally decided I will sleep better without any China exposure.

Edited August 25, 2025 by MxMI17

[frommi]

1 hour ago, Spekulatius said:

Reducing $VNT and $ADM. Both worked fairly well.

Yepp, still hold onto my ADM but its close to getting sold. I sold BG which also worked out and reinvested that into EQNR.

[drzola]

Partners Value Fund 

[Spekulatius]

$ELV - tax loss sales in my taxable account (reduced position by selling shares either the highest cost basis ). I added at end of July so still more than enough. 
 

Edited August 26, 2025 by Spekulatius

[Marco Van Basten]

Sold Transdigm.  

[formthirteen]

One third of BTI.

[Eldad]

27 minutes ago, Marco Van Basten said:

Sold Transdigm.  

Didn’t want to wait until Sept 2nd to get the $90 divi? 

[Marco Van Basten]

5 hours ago, Eldad said:

Didn’t want to wait until Sept 2nd to get the $90 divi? 

I have added to my position in GE, and between GE, Safran and Airbus, I have 30% of my portfolio in aerospace.  TDG is the lowest quality of of the four in my opinion.  

[brk64311]

15 hours ago, Marco Van Basten said:

I have added to my position in GE, and between GE, Safran and Airbus, I have 30% of my portfolio in aerospace.  TDG is the lowest quality of of the four in my opinion.  

Love the strong fundamental and tail wind for the aerospace industry, but do you mind sharing your thoughts  on expectation of future return of your newly purchased GE shares  given the current valuation? Safran and Airbus seem to be more reasonably priced? Thank you.

[Marco Van Basten]

1 hour ago, brk64311 said:

Love the strong fundamental and tail wind for the aerospace industry, but do you mind sharing your thoughts  on expectation of future return of your newly purchased GE shares  given the current valuation? Safran and Airbus seem to be more reasonably priced? Thank you.

Safran is definitely cheaper, and I own it as well, however Safran has other businesses (I don't want to be in the airplane seat business) and a penchant for idiotic capital allocation - they tried to buy a business at an insane valuation and pay shares, thank God for TCI.  Airbus is quite cheap, however I think that it is easier to get into that business - Embraer is a good example, and Comac is trying to do that as well.  New engine however is a more difficult business.  

Here is how I look at GE:

a) If TDG can have 50% EBIT margin (EBITDA-cap ex), then GE should have at least as much

b) They can keep hiking prices in excess of inflation, boil the fog slowly, at inflation + 1% per annum

c) If Chinese, Indians, Vietnamese, Indonesians, Africans, Latin Americans, Pakistanis, et all travel as much as US/Western Europe, global air travel will go up 6x.  So let's assume that volumes will grow at 3% per annum for the next 50 years.

 

So, at 50% EBIT margin, on USD 46bn in 2026 revenues, EBIT = $23bn, pre-tax profit = $23bn, after-tax profit = $17bn, EPS = $16 per share.  On top of that, you get volume growth of 3%+ per annum with effectively 100% return on marginal capital, plus pricing ahead of inflation (granted, some of that pricing is implicitly assumed in margin expansion, but you still get extra top-line and hence EBIT from above inflation pricing).  So say 6% free cash flow yield assuming 50% EBIT margin, and say top-line growth of inflation + 4% per annum, and hence, inflation + 10% annual return.  

[brk64311]

7 hours ago, Marco Van Basten said:

Safran is definitely cheaper, and I own it as well, however Safran has other businesses (I don't want to be in the airplane seat business) and a penchant for idiotic capital allocation - they tried to buy a business at an insane valuation and pay shares, thank God for TCI.  Airbus is quite cheap, however I think that it is easier to get into that business - Embraer is a good example, and Comac is trying to do that as well.  New engine however is a more difficult business.  

Here is how I look at GE:

a) If TDG can have 50% EBIT margin (EBITDA-cap ex), then GE should have at least as much

b) They can keep hiking prices in excess of inflation, boil the fog slowly, at inflation + 1% per annum

c) If Chinese, Indians, Vietnamese, Indonesians, Africans, Latin Americans, Pakistanis, et all travel as much as US/Western Europe, global air travel will go up 6x.  So let's assume that volumes will grow at 3% per annum for the next 50 years.

 

So, at 50% EBIT margin, on USD 46bn in 2026 revenues, EBIT = $23bn, pre-tax profit = $23bn, after-tax profit = $17bn, EPS = $16 per share.  On top of that, you get volume growth of 3%+ per annum with effectively 100% return on marginal capital, plus pricing ahead of inflation (granted, some of that pricing is implicitly assumed in margin expansion, but you still get extra top-line and hence EBIT from above inflation pricing).  So say 6% free cash flow yield assuming 50% EBIT margin, and say top-line growth of inflation + 4% per annum, and hence, inflation + 10% annual return.  

Thanks for sharing your thoughts.  The story (GPD+volume growth and pricing power ) sounds quite similar to MCO, SPGI, which are trading at better valuations?

[Marco Van Basten]

3 hours ago, brk64311 said:

Thanks for sharing your thoughts.  The story (GPD+volume growth and pricing power ) sounds quite similar to MCO, SPGI, which are trading at better valuations?

Yes, but you should have much more volume growth in GE.  Also, countries such as India and China can easily ban MCO/SPGI from their countries, while they cannot ban GE.  I do own MCO though.  

[Eldad]

You may know better than me but I think TDG has such high margins because they do sell things like seats (very low cost to TDG) that are statutorily required to be purchased from them (usually they are the only supplier) for the remaining life of the aircraft. 
 

GE and RTX think, well this business is making seats for an obsolete aircraft and it will only last for 12 more years so we should get rid of it. TDG thinks airlines have to buy those seats from us and no matter what we charge them they would rather do so than buy a new fleet, so we can raise the cost almost as high as we want. 
 

Different model. Although engines are higher value added than seats, it may not be right to think that therefore GE can reach TDG margins. 

[Marco Van Basten]

15 minutes ago, Eldad said:

You may know better than me but I think TDG has such high margins because they do sell things like seats (very low cost to TDG) that are statutorily required to be purchased from them (usually they are the only supplier) for the remaining life of the aircraft. 
 

GE and RTX think, well this business is making seats for an obsolete aircraft and it will only last for 12 more years so we should get rid of it. TDG thinks airlines have to buy those seats from us and no matter what we charge them they would rather do so than buy a new fleet, so we can raise the cost almost as high as we want. 
 

Different model. Although engines are higher value added than seats, it may not be right to think that therefore GE can reach TDG margins. 

Why not?  Why can't engines reach TDG margins?  GE/Safran has 65% market share in narrow body engines.  It is a lot easier to design TDG out of the next airplane than an engine.  

[Eldad]

4 minutes ago, Marco Van Basten said:

Why not?  Why can't engines reach TDG margins?  GE/Safran has 65% market share in narrow body engines.  It is a lot easier to design TDG out of the next airplane than an engine.  

You know more than me about the industry. But I would guess from your statement on the market share dynamics, that there is more competition than TDG faces. I think the engine industry works by accepting low profits on the engine sale and then making it up on parts. I would think that if they try to get as aggressive as TDG on parts pricing, they will lose new engine contracts to their competitors in the long run. 
 

[Marco Van Basten]

29 minutes ago, Eldad said:

You know more than me about the industry. But I would guess from your statement on the market share dynamics, that there is more competition than TDG faces. I think the engine industry works by accepting low profits on the engine sale and then making it up on parts. I would think that if they try to get as aggressive as TDG on parts pricing, they will lose new engine contracts to their competitors in the long run. 
 

You are correct regarding the razor/razor blade model.  However, it is not too difficult to design TDG's parts out the airplane and have someone else do it for the new plane.  Almost impossible with the engine. 

[villainx]

29 minutes ago, Marco Van Basten said:

However, it is not too difficult to design TDG's parts out the airplane and have someone else do it for the new plane.  Almost impossible with the engine. 

 

I would assume TDG would go where the margins are and start from there.  Any redesign would seemingly be more opportunity as TDG would be better able to identify where to go after than other aftermarket folks.  Maybe?

 

[Eldad]

1 minute ago, villainx said:

 

I would assume TDG would go where the margins are and start from there.  Any redesign would seemingly be more opportunity as TDG would be better able to identify where to go after than other aftermarket folks.  Maybe?

 

I think TDG knows their subs may face death eventually. They just know they will get a giant IRR out of it before that happens. I think they would say they would just buy the parts manufacturers for the next generation as they go when the time comes and those businesses are overly discounted by their future obsolescence. 

[Marco Van Basten]

1 hour ago, villainx said:

 

I would assume TDG would go where the margins are and start from there.  Any redesign would seemingly be more opportunity as TDG would be better able to identify where to go after than other aftermarket folks.  Maybe?

 

Any airplane part that is certified can have very high margins in the after-market, unless Heico and airlines cooperate to break the monopoly.  There are two questions: a) what is the likelihood and impact of Heico entering any of their existing parts; b) will TDG be allowed on the next program/s, and will Airbus/Boeing squeeze them for a portion of spare parts profits directly - via contributions to development upfront or sharing of economics on the after-parts?  

My point is that Ge/Safran is much, much harder to squeeze than TDG, and thus GE should have margins at least as high in the commercial engine business.  

Edited August 28, 2025 by Marco Van Basten

[Spekulatius]

Sold $BILL in my tax deferred accounts. Small position, but worked very well.

[Eng12345]

3 hours ago, Marco Van Basten said:

Any airplane part that is certified can have very high margins in the after-market, unless Heico and airlines cooperate to break the monopoly.  There are two questions: a) what is the likelihood and impact of Heico entering any of their existing parts; b) will TDG be allowed on the next program/s, and will Airbus/Boeing squeeze them for a portion of spare parts profits directly - via contributions to development upfront or sharing of economics on the after-parts?  

My point is that Ge/Safran is much, much harder to squeeze than TDG, and thus GE should have margins at least as high in the commercial engine business.  

That brings me back to- I’ll have to see if I can dig it up but I thought I remember hearing a Boeing exec or CEO specifically saying they planned on squeezing suppliers. Which made me think of Transdigm who seems actually pretty easy to squeeze if you’re the OEM.

[Eldad]

49 minutes ago, Eng12345 said:

That brings me back to- I’ll have to see if I can dig it up but I thought I remember hearing a Boeing exec or CEO specifically saying they planned on squeezing suppliers. Which made me think of Transdigm who seems actually pretty easy to squeeze if you’re the OEM.

TDG bread and butter is aftermarket sales to airlines with no leverage by design. OEMs can’t hurt them that much. 

[Marco Van Basten]

47 minutes ago, Eldad said:

TDG bread and butter is aftermarket sales to airlines with no leverage by design. OEMs can’t hurt them that much. 

They can destroy TDG by not including their products on the next generation of airplanes or by using this threat tell them to share economics on existing planes.  PMA manufacturers can team up with airlines to destroy existing after-parts business.