Top 5 Stocks Billionaire Daniel Loeb Just Bought

4. TransDigm Group Incorporated (NYSE:TDG)

Third Point owned 435,000 shares of TransDigm Group Incorporated (NYSE:TDG) at the end of Q3, opening a stake in the company valued at over $206 million on September 30. Hedge fund ownership of the aerospace company rose by over 50% between the end of 2017 and the middle of 2020 among the select group of high performing funds tracked by Insider Monkey.

Vulcan Value Partners discussed Transdigm in its Q2 2020 investor letter, highlighting the company’s wide moat over potential competitors and its strong free cash flow generation:

“TransDigm Group Inc. is an aerospace manufacturing firm that provides highly engineered, niche components for use on commercial and military aircraft. The vast majority of the company’s profits come from aftermarket sales. Most of its products are small volume, low cost items that are sole sourced from TransDigm. It is economically unlikely for a new company to compete on any particular product because volumes on individual components are not large enough to justify the investment in manufacturing facilities and regulatory approval. The company produces high levels of free cash flow, has long equity duration, a strong business model, and an effective, shareholder-oriented management team who are good capital allocators.”