✈️ HEICO: A 186-page Deep Dive
A Serial acquisition-driven compounder
Hi Partner 👋
Today, you will receive a full investment case of 186 (!) pages about HEICO
If you invested $10.000 in 1990, you would have $13.9 (!) million today.
This wonderful company definitely deserves your attention.
Slow Compounding
This investment case was made by my friend Alexander from Slow Compounding.
He was very kind to share it with us.
You can check out his work here:
HEICO - General Information
👔 Company name: HEICO Corporation
✍️ ISIN: US4228061093
🔎 Ticker: HEI
📚 Type: Serial Acquirer
📈 Stock Price: $ 361.7
💵 Market cap: $ 50.6 billion
📊 Average daily volume: $ 244.8 million
How does HEICO make money?
HEICO makes money by selling replacement aircraft parts, electronic components, and other specialized products for the aerospace, defense, medical, and industrial industries.
It also grows by acquiring high-quality niche businesses that strengthen its product portfolio.
The full investment case is very extensive (196 pages).
In case you don’t have time to read it all right now, let’s give you the highlights first.
Three main takeaways
Here are the 3 most important takeaways:
1. Market Leader
HEICO builds parts for planes. Not just any parts, but parts approved by the FAA. This is the U.S. authority that decides what's safe to fly.
2. Mega Serial Acquirer
HEICO has successfully completed more than 112 acquisitions since 1990.
3. Strong Compounder
HEICO has consistently compounded shareholder value over the long term.
Conclusion investment case
Let’s now summarize the full investment case for you.
HEICO is one of the best compounding businesses in the aerospace industry.
The company designs and manufactures replacement aircraft parts and specialized electronic components.
It operates a capital-light business with predictable recurring demand.
Every time an aircraft flies, parts wear out and eventually need to be replaced.
This makes HEICO a tollbooth on the global aviation industry.
The business benefits from:
FAA-approved products that are difficult to replicate
A decades-long reputation for quality and reliability
High switching costs and long customer relationships
HEICO also has an excellent acquisition strategy.
They have successfully completed over 112 acquisitions while allowing each business to operate independently.
Today, their product portfolio has grown to over 20,000 approved replacement parts.
While the opportunities are attractive, there are also risks.
Airlines may be restricted from using PMA parts under certain contracts
Existing players continue to defend their aftermarket business
Aviation demand can weaken during recessions or global disruptions
Despite these challenges, management continues to invest for the long term by expanding its product portfolio and acquiring high-quality businesses.
Onepager
Here are the basics of HEICO (click on the picture to expand):
Quality Score
Every company gets a Quality Score based on 15 metrics.
Finally, the company gets a ‘Total Quality Score’ which is calculated by taking the sum of the score of all 15 metrics and dividing it by 15.
As you can see in the table below HEICO gets a Total Quality Score of 7.8/10.
Full Investment Case
You can download the full investment case here:
Are we buying?
So, are we buying HEICO? Is it worth a spot in Our Portfolio?