TransDigm Group (NYSE:TDG) closed at $1,107.99 on October 9 and returned -10.15% over six months, versus 24.3% for the Insider Monkey Billionaire Index and 15.1% for the State Street SPDR S&P 500 ETF Trust. The negative book value of about -$167.97 per share is a deliberate result of borrowing to fund buybacks and large special dividends, which pushed debt to $33.49 billion, and the company pays no regular dividend. Its proprietary aircraft components generate high aftermarket margins, with a 46.01% operating margin and 22.50% revenue growth in the latest quarter, and a current ratio above three means no immediate liquidity problem. The main risk is the installed base, since aftermarket demand depends on aircraft flying and retiring slowly, and a sustained fall in flight hours would hit the highest-margin revenue first. The article concludes that borrowing built this structure and is the factor most likely to unbuild it.
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