TIP851: HEICO VS. TRANSDIGM: WHOSE AEROSPACE MONOPOLY IS BETTER?

W/ KYLE GRIEVE & SHAWN O’MALLEY

TIP851: HEICO VS. TRANSDIGM: WHOSE AEROSPACE MONOPOLY IS BETTER? W/ KYLE GRIEVE & SHAWN O’MALLEY

03 October 2026

In today’s episode, Kyle Grieve and Shawn O’Malley discuss HEICO and TransDigm, two dominant players in the aerospace components industry known for their pricing power and resiliency. They’ll compare how each company grows through acquisitions and organic expansion, how they approach debt and capital allocation, and what gives each business its durable competitive advantages. The discussion also covers the risks facing both companies, including regulatory scrutiny and reliance on continued aerospace demand, as well as potential sources of future growth.

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IN THIS EPISODE, YOU’LL LEARN:

  • Why the aerospace industry has such high barriers to entry
  • How TransDigm built its sole-source pricing power model
  • How HEICO competes by underpricing original equipment manufacturers
  • Why both companies rely heavily on acquisitions to grow
  • How each company’s approach to debt differs sharply
  • What gives HEICO and TransDigm such durable competitive advantages
  • Why regulators have started scrutinizing TransDigm’s acquisition strategy
  • How ownership and incentive structures shape each management team
  • What risks could disrupt either company’s long runway of growth
  • Where future growth could come from for both businesses
  • And so much more!

Disclosure: This episode and the resources on this page are for informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. For full disclosures, see link.

TRANSCRIPT

Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:03] Kyle Grieve: 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.

[00:00:15] Shawn O’Malley: Coming into this episode, I assumed one of them would very much be the obvious choice for coming out on top. But really, the more I researched, I realized these businesses are a lot closer in terms of quality than I initially thought.

[00:00:28] Kyle Grieve: Right. And I think it even got close enough that we really had to nitpick at some of these more subtle nuances of these businesses just to come to some sort of conclusion. But I will admit, the tiny edges here and there do really add up. But I think there’s actually one place where these businesses aren’t that close at all, and that’s in the price that you have to pay for them.

[00:00:44] Shawn O’Malley: That’s right. And one of them trades, like the market already knows it’s a much better business. And the other is price. Like it’s just fine. So the real question today isn’t only which business is better, but which business would make the better buy today.

[00:00:58] Kyle Grieve: Let’s find out.

[00:01:03] Intro: Since 2014, with more than 200 million downloads, we have interviewed the world’s best investors, studied deeply the principles of value investing, and uncovered many compelling investment opportunities. We focus on understanding businesses and intrinsic value, investing accordingly, and sharing everything we learn with you. This show is not investment advice. It’s intended for informational and entertainment purposes only. All opinions expressed by hosts and guests are solely their own, and they may have investment in the securities discussed. Now, for your hosts, Shawn O’Malley and Kyle Grieve.

[00:01:49] Kyle Grieve: If you caught our YouTube live stream on serial choirs last month, you caught a sneak peek of where this video today is headed. So we concluded in that conversation that HEICO was a higher quality business than TransDigm, but we didn’t really dig into specifically why that is. And given that both of these companies are very, very good businesses, I thought it’d be a great exercise to examine these two aerospace monopolies in much greater detail.

[00:02:11] Shawn O’Malley: So we’ve 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 seen the aerospace industry as being probably well beyond my circle of, 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 HEICO in it.

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