TransDigm 是一家强大的垄断型企业，潜在回报为十几倍中低段，但出于对杠杆和风险的担忧，说话者更偏好其他持仓（HEICO）或选择观望。

And with Trans Am it's almost a reverse. The stock is cheaper, but more of the risk sits inside of the business itself. And that makes sense. And so the growth of both businesses has just been insanely impressive.

And it really comes down to two things organic growth or the ability to continue growing revenues of their subsidiaries that they already own, and then inorganic growth or the revenue associated with consolidating their income statements with newly acquired businesses.

So with both of these businesses. Growing so much over multiple decades, the looming question really is can they continue doing so? And and if so, for for how much longer? And then what is the composition of organic and inorganic growth.

Right. So picture this for a second. A 30 year old aircraft is sitting on a tarmac at your nearest international airport. The plane is still flying and generating revenue for the owner, but every bolt valve, seat belt and sensor on that plane will eventually wear out and need to be replaced multiple times before that aircraft is retired.

That plane isn't being redesigned, they're just running it for as long as they possibly can to get as much out of it as possible. And that, I think, is really the growth story in a nutshell.

More planes like this sitting around longer, constantly in need of more components over time. So when I'm assessing a serial choir, I always have to ask this question. If a business is a true monopoly and already owns a large percentage of its target market, well then growth becomes that much harder to come by.

Yes, you can use your monopoly power to increase your prices, but as we've already seen, you can only really take that so far before you start raising red flags with regulators.

So Daniel, I think did a really good job of explaining the inorganic growth runway for trans time. Now, the gist of that was that annual global airline maintenance expenses are somewhere in the $135 billion range.

Since Trans Am is active in about half of that market, it leaves them a market valued at around $60 billion. Now, aftermarket revenue for Trans Dime is currently around $5 billion, but this includes military components.

So this $5 billion number shrinks, meaning they have kind of mid-single digit market share for the entire airline industry. So this means that they have quite a bit of space, I think, to grow there.

Then we have organic growth. We can't forget that trans dime is really good at optimizing their acquisitions to grow organically. Once they are part of Trans Am, trans am has an average organic growth rate of about 6%.

And keep in mind, this includes the two negative outlier years immediately after Covid, which artificially suppresses that number.

Yeah, Covid really threw a wrench into assessing businesses because you have to try and figure out whether to include metrics from that time or not. And will another Covid type event happen again in our lifetime?

So maybe, maybe not. But when and how big the impact will be is pretty much impossible to underwrite. And given that Hiko is in a similar industry to transform, would you say the Tam number that Daniel used also applies to Hiko?

Well, I think it's that time of the episode where we speak about intrinsic value. And so Daniel gave us his intrinsic value estimate for Trans Sam about a year ago. And my question for you is, yeah, do we need to change his numbers much, and how have things changed over that time? So let's get into the comparisons.

Yeah, let's do it. And no, actually I don't think I have any disagreements with Daniel's modeling. The only difference is that the company has basically continued to grow, and the share price has pretty much stayed the same as when he covered it.

Meaning it's probably even more attractive now than when it was first added to the intrinsic value portfolio.

We know transcendence intrinsic value again from when Daniel modeled it out and estimated it to be about $1,100, which is actually about exactly where the stock is trading today.

So props to Daniel. And that means the returns are going to be pretty much in line with the discount rate we use to discount the cash flows, which is maybe mid to low teens.

Trans am is also an incredible business, and the fact that it's multiple is just two thirds of Hiko is very interesting to me. I still think Trans Am probably offers a higher upside in terms of returns because of this, but to be honest, I'd probably still rather own Hiko just because I do like the business model and it does still have some of those small edges that I think are very valuable.

And what's transcendent, I think I'm happy to to stay on the sidelines with that one. Well, that's all we have for you today. And as usual, I'll leave you with a quote here by trans.

I'm founder Nicholas Hawley. We have to say, focus on both sides of the details of value creation, as well as careful management of our balance sheet. You can see, I think today that trans I'm over its history has walked this fine line very well because of the monopolistic and highly forecast nature of its revenue streams, it has been able to continue to grow at a high rate while maintaining a pretty high degree of leverage.

Well, this alone might chase some investors away. I think the strength of their competitive advantage is, in my view, makes it somewhat more palatable. That's all we have for you today, and we'll see you next time.

Trans-Am is basically a conglomerate of 100 small monopolies. They buy companies that dominated specific needs, leverage their pricing power, and then scale it up. They've done that for over three decades now, and they compounded at a ridiculous 30% per year.

They've seen quite some pushback throughout the years, though, for flexing their pricing power maybe just a bit too much.