50X
TransDigm: Private Equity in the Public Markets with Rob Small [50X, EP.4]
Episode guests
Podcast summary created with Snipd AI
Quick takeaways
- High-conviction in TransDigm valued long-term performance over short-term gains.
- Investment decisions favored growth potential of familiar companies like TransDigm.
- Tegus aimed to provide comprehensive qualitative insights beyond traditional data for investors.
Deep dives
Highest Conviction Position
Transtime was the largest position due to highest conviction level, emphasizing the company's long-term performance over valuation. Adding to a comfortable favorite like Transtime was easier than risking on lesser-known businesses.
Relative Return Drive
Investment decisions were steered by relative return, favoring compelling ideas for growth. The ease of increasing stake in a familiar and high-conviction company like Transtime showcased the preference for proven performance over unknown risks.
Evolution of Tigus
Tigus's evolution involved enhancing data coverage depth and relevance for investors. The focus on customer-relevant data sets and expanding geographical coverage reflected Tigus's commitment to qualitative insights beyond traditional data.
Future Direction of Tigus
Tigus aims to become a comprehensive research hub for fundamental researchers across various industries. The focus on expanding data sets and global coverage highlights the ambition to cater to diverse research needs and enhance qualitative information availability.
Capital Allocation Philosophy
The podcast episode delves into the capital allocation philosophy at Stockbridge, focusing on adding to high-conviction positions and trimming cautiously based on risk management. The emphasis on disciplined selling, particularly concerning premium valuations and long-term prospects, underscores the strategic approach to investment decisions at Stockbridge.
This is our final episode in a series of four on TransDigm. In this discussion, we contrast TransDigm with traditional private equity portfolio companies, examine the company’s approach to capital allocation, and dissect Berkshire’s and Stockbridge’s position management over time. Our guest is Rob Small, a Managing Director at Berkshire Partners and Stockbridge, as well as a Director at TransDigm. Under Rob’s direction, Stockbridge has maintained a concentrated position in TransDigm and demonstrated remarkable conviction to add (and occasionally trim) at opportune times.
For the full show notes, transcript, and links to mentioned content, check out the episode page here.
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This episode is brought to you by Tegus. The team at Tegus has built a full company intelligence platform aimed at streamlining the investment research process. In preparation for the 50X series, we actively used Tegus to gain qualitative insights beyond traditional reported data. To learn more and enjoy a free trial, visit tegus.co/50x.
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50X is a podcast that dissects the anatomy of extraordinary long-term investments. The show is hosted by Will Thorndike and the team at Compounding Labs, and brought to you in partnership with Colossus.
In each episode of 50X, we look in detail at an investment that has appreciated at least 50-fold. From the seat of the professional investor and occasionally the CEO, we explore its origins, evolution, and eventual outcome, studying key themes around long-term value creation ranging from operations, capital allocation, and culture to pivotal buy and sell decisions. To enhance the quality and depth of our interviews, we rigorously study each asset in advance, diving into all available public and private resources.
Learn more and dive into our research at 50xpodcast.com
Follow us on Twitter: @50Xpodcast and @joincolossus
Show Notes
[00:00:00] – 50X Introduction
[00:02:04] – Sponsorship: Tegus
[00:07:18] – [First Question] - Management Team
[00:10:05] – Culture, Decentralization, & Compensation
[00:19:04] – Evaluating Nick Howley as CEO
[00:21:57] – Rob’s Service on the Board of Directors
[00:27:47] – Approach to Capital Allocation
[00:31:29] – Returning Capital to Shareholders
[00:33:53] – Operating under Private vs. Public Ownership
[00:36:41] – Sale Decisions for Private vs. Public Equity
[00:40:41] – Stockbridge’s Major Buy/Sell Decisions
[00:48:46] – TransDigm’s Influence on Rob’s Investment Philosophy
[00:53:39] – Examining Stockbridge’s Approach to Selling
[00:58:14] – TransDigm’s Future
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