Heico ($HEI) podcast mentions
Per Ticker.id: 33 Heico ($HEI) mentions across 1 podcast (30 days) — timestamped, verifiable quotes, updated 2026-10-04.
Welcome back to The Investor's Podcast, episode 851. Today we're pitting two of the best businesses in the entire aerospace industry against each other, Heico and Transdigm. We'll look at these two businesses mainly from two angles in quality and value.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04So we have covered TransDigm on the show before, and I definitely saw why the company is beloved in many quality investing spaces, but I admittedly have not looked into Heico with as much detail. And I think just generally I've I've seen the aerospace industry as being probably well beyond my circle of competency. And that's certainly no excuse though for not trying to better understand it, especially when you have some great companies like TransDigm and Hyco in it.
Preston Pysh · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Yeah. And to be honest, I think I've held a very, very similar bias to you there, Shawn. One of the first publicly traded companies I ever bought was Air Canada. And while I still actually use that business very heavily today because of all the points that I get with them, I actually have zero regrets about selling that business at a profit because, you know, kind of as you already know, airlines for the most part are simply just not good businesses. But when it comes to these businesses like Haico and Transam, I think I probably allowed that bias to maybe bleed into the entire aerospace industry, which is definitely a mistake because man, many of these businesses that make and maintain planes and, you know, their parts or components, they're just cash cows. So, you know, 3 of Heico's named competitors are General Electric, Pratt& Whitney, and Rolls-Royce, and they are all just minting cash because they are the 3 companies that really make jet engines for the entire aerospace industry. GE Aerospace has 27% profit margins in the last 6 months, just to give you an idea of just how profitable the industry is.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04And both Heico and Transdigm has very nice profit margins as well. You know, not quite as high as GE Aerospace, but still very solid, with Heico coming in around 18% and Transdigm producing profit margins of about 21%.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04And those aftermarket sales make up about 55% of Transdigm's business, so not trivial at all. And before we discuss Heico's business model, I, I have to mention that Transdigm has 3 primary business segments to it. There's power and control, there's the airframe segment, and then there's a non-aviation segment. And so power and control provides components that help provide planes with well, power or control of the other parts. So this includes things like ignition systems, specialized pumps and valves, generators, sensors, and more things in that vein. Whereas the airframe segment, that is the part that deals more with what you'd find in the fuselage of the plane. So parts that open and keep doors closed and cockpit security and washroom components and seat belts and parachutes and more stuff like that. Whereas the non-aviation segment is more of a rounding error, to be fair, for Transdigm's revenue.
Preston Pysh · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Yeah, there really is a very wide range of applications for what they make, and I could see some of these industries being absolutely massive, but they haven't really made growing this part of a business a priority. So I assume there's probably enough opportunities right now, at least in the aerospace components industry, for them to just not have to put too much effort into the non-aviation sector. Now, Transdigm grows both organically, driven by its value drivers, and then also through M&A. But let's now take a look at Heico. So it's not too dissimilar from Transdigm. You know, they both have organic and non-organic growth. They both made a ton of acquisitions over their lifetime. Heico has made more than 110 acquisitions since 1996. So Heico also makes parts for OEMs for new aircraft, but they have a very large aftermarket component as well. So if you add up Heico sales of aftermarket parts as well as repair and overhaul part services, they have aftermarket revenue making about 59% of their revenue. So also quite similar to Transdigm.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Yeah, that's completely correct. So as of the latest quarter, the Flight Support Group makes up about 67% of revenue. Now, This segment uses proprietary technology to both design and manufacture jet engine and aircraft replacement components. So they sell to commercial and military customers, but here's where they kind of separate from Transdigm. So Hyco is very intentional about setting prices consistently about 30 to 50% below the OEM prices, but this is only the start of their competitive advantage. So another vital aspect of Hyco's business model is the regulation of its parts. So As I mentioned earlier, you can't come in with a cheap replacement part and expect anyone to actually buy it from you. So in the US, the Federal Aviation Administration has a program known as the Parts Manufacturer Approval. Nearly every single component that Heico sells has been approved specifically by the FAA.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04So I, I think the simple way to think about this is that Heico is like maybe the generic drug company of the aerospace industry. They sell a product that is something like the functional equivalent of the original equipment manufacturer's component, but they do so for a really steep discount. And the FAA is like this governing body that decides whether their components are up to par basically. And then this approval process can take anywhere from 2 to 5 years depending on the complexity of the part involved.
Preston Pysh · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Yeah, I don't think I have too much to add from what you said there. You said it very well. I think it's still kind of hard for me to say because I obviously, similar to you, I like businesses which can provide a very, very similar product at a large discount. But most businesses that I've seen in the discount area are also in industries that sell these kind of largely commoditized products, something like a Walmart or a Costco. But the aerospace industry in which Hyco operates clearly does not sell commoditized products due to the high barriers to entry. So while I do think it's compelling, I'm still not sure if it's more compelling than the pricing power advantage TransDigm offers. You know, the ability to consistently raise prices is really, really strong. Yes, the component parts will naturally have some inflation built in, but if you can price your components higher than your input costs, well then you get this massive boost to your profits due to the effects of operating leverage. Another very important part of TransDigm and Heico's business model though is in M&A, which we have to go over in a little more detail here as it could be part of what sets one business apart from another.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Well, since the business models, as we've said, are, are so similar, yeah, I do think we're going to need to, to kind of get into the weeds here to break things apart. So looking at the M&A history of both companies, Heico has done 113 acquisitions over about 35 years. And so That's an average pace of a little more than 3 acquisitions a year, which is not actually that high of a number for a business that gets labeled as being a serial acquirer. And it is worth noting that this year in particular though has been pretty active. So they've done 6 deals in 2026 already.
Preston Pysh · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Second, they are a very good business with strong barriers to entry. And third, they want superior leadership teams that they'd be happy to work for, for the next 3 decades. Victor Mendelsohn, the co-CEO of HEICO, along with his brother Eric, has said they generally look for businesses with about a 20% operating margin and then a return on investment of about 20 to 25%. So you can see there in the point that they made about management that not only is HEICO long-term, but they also want to partner with people who are also long-term. Let's take a quick break and hear from today's sponsors.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Yeah, for sure. That's one of the more underrated aspects of— I like the way you, you call it there, the forever home model. I think that describes it pretty well. I mean, if you're a a founder deciding who to sell your life's work to, I don't think we should underestimate that. A lot of these people have built these businesses over a lifetime. Knowing that the buyer is not going to gut your team or flip the business in a few years really matters a lot because the team are people that you've maybe worked with your entire lifetime and they're like family members, they're friends, they're people you send Christmas cards to every winter. So having that reputation of treating the businesses that they take over well, I think can help HEICO win deals without always being the highest bidder. And that's an advantage we've seen with Berkshire Hathaway too and Warren Buffett, where he, for the most part, just wants to let companies keep doing what they've been doing and provide some sort of liquidity exit, but he doesn't want to come in and do this private equity approach of just slash costs and fire everybody and something like that. And so I think this advantage does show up inside the business too.
Preston Pysh · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Well, since we're, we're speaking about debt, it's important to talk about really the amount of, of TransDigm's debt I find to be a bit— makes me a bit uneasy compared to how much debt a business like HEICO uses, where they do so at a much lower ratio relative to their operating earnings. So just to put some numbers around that for context, HEICO's median net debt to EBITDA, where EBITDA is an operating earnings proxy, it's about 1x. So their net debt is just a 1x multiple of their operating earnings. Whereas if you look at TransDigm, they have about 6 times their operating earnings in net debt going back over the last 2 decades. That's a median figure. So I will admit though, it is very clear in TransDigm's case that many of its subsidiaries are much needed by the aerospace industry, and that might even be an understatement.
Preston Pysh · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04And because of this, its future revenue streams are very much very reliable and, and forecastable. Which supports them being able to carry more leverage. But again, when you compare the two, just simply Heico is much less leveraged.
Preston Pysh · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04Yeah. I mean, I think it's kind of impossible here not to give the edge in terms of debt to Heico when you account for TransDigm's kind of Bond villain-sized debt pile. And I do want to look at debt a little more, but in terms of M&A, I did want to add a few things here for TransDigm. So TransDigm, through its chairman Nicholas Howley, is very specific about how it improves incoming acquisitions. Sometimes they will buy a business just to carve out very, very specific product lines, then sell the parts that they don't like. This allows them to leverage their 3 value drivers: price increases, cost reductions, and new business, which helps drive further margin expansion as well as organic growth within their acquisitions. So a great example of this framework in action that TransDigm shared was in this business called Esterline Technologies. So this was a business that they acquired back in 2019. They ended up selling about a quarter of the business, getting rid of these non-aerospace units or businesses that didn't fit their criteria. But over a 5-year period, they actually doubled their EBITDA margins in that one business.
Kyle Grieve · The Investor's Podcast (We Study Billionaires) - The Investor’s Podcast Network · TIP851: HEICO Vs. TransDigm: Whose Aerospace Monopoly Is Better? w/ Kyle Grieve & Shawn O'Malley · 2026-10-04