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HEICO Corporation Message Board

  • Howie58 Howie58 Mar 28, 2003 10:54 PM Flag

    A Contrarian, Straw Hat in Winter Play?

    At a time when AMR is contemplating bankruptcy, and airlines are going to contract, buying HEI seems like the ultimate contrarian play. A thought and question--will HEI benefit from fleets getting older on average, or will the airlines contract by dumping their oldest and least efficient planes--Pep Boys and Auto Zone benefit from recessions when avg. age of cars increases. . . but is that the case with the current cuts in the airlines?

    I live in Hollywood and drive buy this company daily. . . just thinking.

    What is the board take on this?

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    • Made a ton of money in this stock many years ago ~x10 purchase price.

      Eventually became disillusioned and sold when I realized that their torrid pace of earnings improvement would have to continue indefinitely due to huge option grants to management.

      The fact that active airline fleets are newer due to idled planes also a cautionary factor as well. If option grant policy hasn't changed, a 50% earnings improvement might only translate into a 25% shareholder improvement due to option dilution.

      Cheers

    • Good question. Heico talks about the airlines needing to cut costs so will need the Heico parts which can save them money. But if the only planes flying are newer, does this reduce the demand for even the cheap parts ?

      I also, would like to know the answer of how that plays out.

      • 1 Reply to youcannotbesirius
      • You:

        If you believe that the market is "rational," it doesn't like Heico's prospects--you don't see money making firms selling below book value (if I can believe the Yahoo numbers).

        Mendelson may need to increase share buy back; he overthrew the prior management on grounds that the company's value wasn't being realized--now the shoe may be on the other foot. Meanwhile, the salaries he and his family are receiving seem quite high.

        This company's share values may be telling us that airline capacity will continue to shrink. Not a particularly pretty picture.

        Best,

        Howie

 
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58.60-0.07(-0.12%)Apr 24 4:02 PMEDT