Heico Corp - Class A

We added to the Fund’s holdings in HEICO during the quarter. This purchase showcases our patient approach to building newer investments when stock prices come our way. We see a clear path to modest organic growth, operating margin expansion, and value-creating capital deployment. HEICO enjoys leading market positions and enviable economics in its water quality and packaging, labeling, and product traceability businesses.

HEICO posted record fiscal Q2 (quarter to end-April) with earnings up 41% on 18% organic growth. Both segments fired: Flight Support grew 21% (19% organic) and Electronic Technologies 34% (17% organic), lifting margins by roughly 290bps and EPS by 48%. Aftermarket aerospace demand and the steady integration of recent acquisitions continue to compound at an exceptional rate.

Aerospace company HEICO reported another quarter of accelerated growth across both its Flight Support and Electronic Technologies segments, sending shares higher. This growth reflects the company's strong positioning within the AI ecosystem, benefiting from increased demand for its products and services.

Aerospace company HEICO reported another quarter of accelerated growth across both its Flight Support and Electronic Technologies segments, sending shares higher. This growth reflects the company's strong positioning within the AI ecosystem, benefiting from increased demand for its products and services.

We added new positions in HEICO late in the quarter. HEICO’s Flight Support Group is best known for designing and manufacturing aftermarket replacement parts for commercial aircraft, while the Electronic Technologies Group makes highly engineered, mission-critical subcomponents for the aircraft, spacecraft, and defense markets. We think HEICO’s stock offers double-digit return potential from the late quarter stock price lows.

Under the able leadership of the Mendelson family, HEICO’s decentralized ownership culture has become a growing competitive advantage. Many of the aerospace industry’s current supply chain problems are the consequence of short-term decisions made in the wake of the COVID-19 pandemic. As manufacturers continue to struggle to ramp the production of new aircraft, rising air travel demand must be served through greater utilization of the existing fleet. The result has been higher maintenance demand, parts shortages, and price inflation. In short, a perfect environment for a low cost, trusted second source such as HEICO to gain market share. HEICO has become a lifeline to aircraft operators offering substantial cost-savings and alternative supply in an otherwise tight environment. These advantages were on full display in 2025, with HEICO growing volumes several points faster than OEM peers, expanding margins, and generating a second consecutive year of 40%+ growth in free cash flow.

Heico Corp. has shown impressive performance, gaining 39.1% in the first half of the year. The company specializes in making spare parts for airplanes and is benefiting from Boeing's struggles to produce enough new jets, as older planes require more parts than newer ones. This positions Heico favorably in a market where demand for spare parts is increasing. The manager appreciates Heico's growth potential and its role in the portfolio, indicating a strong belief in its future performance.

Heico develops and sells aircraft parts that serve as alternatives to the expensive parts sold by original equipment manufacturers. Its non-original parts continue to take share of the total parts market due to their high quality and low prices. Strong demand from commercial airlines, coupled with optimism around higher defence spending and greater government efficiency, lifted Heico’s sales and earnings growth outlook during FY25.

HEICO Corporation, a midcap aerospace parts and services company, is the Fund’s second-largest holding and top performer for the quarter. HEICO’s flight services group continues to post strong growth despite travel volumes flattening out from the post-Covid recovery. This resilience in performance highlights the company's competitive position and growth potential in the aerospace sector, making it a valuable asset in our portfolio.

HEICO was among the top-five absolute contributors to year-to-date returns, indicating its strong performance within the portfolio. However, there is no explicit directional argument made regarding its future prospects or valuation.