TransDigm Group

Playbook and discipline. TransDigm’s capital allocation mirrors a focused private‑equity approach: acquire proprietary, high‑aftermarket businesses, drive operational improvement, and routinely return capital via large special dividends when leverage and opportunity allow.

In the past 18 months it acquired CPI’s Electron Device Business, SEI Industries, FPT Industries, Raptor Scientific, closed Servotronics in July 2025, and struck a deal for Simmonds Precision Products from RTX, while paying a 75 dollar special dividend in October 2024 and a 90 dollar special dividend in September 2025. YTD FY2025 it also repurchased roughly 0.5 billion dollars of stock.

Assessment. The track record of value creation is excellent, but the model explicitly tolerates higher leverage and occasional political scrutiny, so we require a valuation cushion. SBC exists but is not egregious relative to cash generation, and buybacks have been sized within free cash capacity.