November 1, 2024

Warren Buffett Eyes the Stars, Invests $185 Million in Aerospace Upstart HEICO

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As Berkshire Hathaway (BRK.B, Financial) shifts towards aerospace, Warren Buffett (Trades, Portfolio) has made a significant bet of $185.37 million on HEICO Corporation(HEI.A, Financial), an underdog to Elon Musk’s SpaceX. The investment is represented by 1,044,242 shares, 0.75% of HEICO’s total shares, and takes only 0.07% of Berkshire’s wide-ranging portfolio.

Being in business since 1957, HEICO Corp is a leading supplier of technologies and products for aerospace, defense, and electronics industries with innovative and superior yet affordable value-added solutions to its clients. The company’s products are needed in different sectors, such as large commercial and military aircraft industries, and new areas, such as industrial turbines and missile industry. HEICO has been a remarkably consistent grower because its market capitalization is valued at more than $29 billion, and its stock has risen by 34.77% year to date.

HEICO can be understood like many other investments undertaken by Buffett. He usually looks for good businesses run by good management, which have good fundamentals and are ready to grow. This move comes at a time when the aerospace and defense sectors are increasing their pull with investors because of increased concerns for safety worldwide and an upturn in the number of flight operations since the COVID-19 restrictions were lifted.

The investment is precious as HEICO begins entering spaces that intersect with SpaceX, mainly space defense technology. Even though SpaceX has established itself as a pioneer in the commercial space venture, HEICO has a strong position in aerospace technologies.

Apart from going after a grand market in aerospace, Buffett also ensures that Berkshire could benefit from continuous space commercial and defense activities, having HEICO as its backer, which has also looked well-positioned in the market for years now.

This article first appeared on GuruFocus.

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