Bearish on TDG; rates it a B due to 'extortionary' pricing tactics that are viewed negatively compared to low-cost providers.

Yeah, so Trans I already mentioned, I mean, it it's very similar. Um but what Transdime has done in the past, and Munger commented on it was that uh they've increased their prices quite substantially.

And you know, the reasoning being that some of these parts, you know, I think I saw a number, you know, it might cost $1,000 on a, you know, $100 million airplane. Who cares if we raise it to $2,000?

That's kind of what what what their their reasoning has been over time.

And so they actually taken to court, I believe, uh, who was it? I don't think it was was it the Pentagon? It might have been the Pentagon. I can't remember, but it was some some some large US government agency.

And they basically said like, "You guys are gouging us." And then Munger came in and said, you know, that's it's just it's not a business model that he would want to be a part of.

He wants to be part of business models where everyone's a winner.

And, you know, you can make that argument that it's it's good good business practice or bad business practice. I'm not here to to to to get into a moral argument on that. Um, but just saying, you know, that's that's kind of what they do.

Um, and uh, so with Transdime, it's it's very similar like I just said with Hiko. we might have um you know a part on some sort of military aircraft that's going to be in commission for the next 40 years.

And so if you need to maint maintain that aircraft over the next 40 years, they're going to be buying a part from Transdime. And so, you know, that's pretty cool because there's not that many businesses where you can just look into it and be like, "Yeah, they're going to be generating revenue for the next 40 years or next few decades pretty much guaranteed."

Um and then on top of that, if they want to raise their prices, there's not a lot of options. There's nothing you can really do. you basically just kind of have to have to eat those those price increases again unless regulators come in and make a big stink about it.

So, if I were comparing the two, um, and again, I really like Transdime because Nick Howley is involved and he's this the he's involved with uh Perimeter Solutions, another business that I I I actually own and that I've also covered as well on there. So, I like a lot of what he's done.

Um, but I will say given that these businesses in in a lot of ways are are very similar the whole point about the pricing power versus you know kind of being a lowcost provider.

I kind of give I kind of have to give the edge in my opinion to the to the lowcost provider. I think just because um they're going to have really good relationships with their customers.

You know their customers aren't going to be coming up to them being like last year we paid you know we last year we paid a,000 bucks for this. Why are we paying 1,500 bucks for this?

the exact same part. And you know, if if you were in a super competitive industry where there were other options out there, well, you couldn't do it, right? But that's I think that's kind of the power the power of of Transdime.

But again, I just I think I would have to give the edge here slightly to Haiko. But I would still put Trans Dime in in I think I would give Transime a B.

I'm probably a little more bearish on uh on Trans Dime. Um just because yeah I don't love the I don't love the um it's almost like an extortionary business model right like Charlie Mer um didn't didn't approve of it.

Uh and you know I I saw this a lot when I studied FICO. Um I I heard about for such a long time what an incredible quality compounder it was. And to me a quality compounder is a business that's able to um you know reinvest uh consistently in itself over time. like we saw with Constellation Software, uh, you know, four times as much, uh, cash flow that they're they're allocating to acquisitions, uh, and they're still generating high returns in capital. That's to me almost the epitome of of quality.

Uh, and, you know, I'm not I'm not as wellversed in in Transime. I don't I don't think it's quite like the FICO situation. Um, but you know what I don't like about FICO, similar to Transime, is like I said, um, really this like kind of extortionary pricing tactics.

And I think that I think that eventually comes back to bite you.