How Does the Pricing Power Help TransDigm Group Incorporated (TDG)?

Andvari Associates, an investment management firm, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter the fund returned 7.2% net of fees compared to the SPDR S&P 500 ETF’s 4.3% decline. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its first quarter 2025 investor letter, Andvari Associates emphasized stocks such as TransDigm Group Incorporated (NYSE:TDG). Headquartered in Cleveland, Ohio, TransDigm Group Incorporated (NYSE:TDG) is an aircraft components manufacturer and supplier. The one-month return of TransDigm Group Incorporated (NYSE:TDG) was -0.99%, and its shares gained 6.65% of their value over the last 52 weeks. On April 9, 2025, TransDigm Group Incorporated (NYSE:TDG) stock closed at $1,317.07 per share with a market capitalization of $69.08 billion.

Andvari Associates stated the following regarding TransDigm Group Incorporated (NYSE:TDG) in its Q1 2025 investor letter:

“For the handful of companies in Andvari portfolios that do make physical goods, they all share a mitigating factor: they all have above average pricing power. The source of their pricing power stems from selling products that are critical to the end user and yet are a small proportion of the customers’ total costs. They also often bene t from high switching costs. Danaher, Mettler-Toledo, Zoetis, and IDEXX fall into this camp, as well as TransDigm Group Incorporated (NYSE:TDG).

TransDigm is a business with extreme pricing power. They make hundreds of different parts that go into commercial and military aircraft. Because TransDigm owns the intellectual property or is the sole source provider of nearly all its products, it can easily raise price increases when there is inflation or when its costs rise.”

An aerial shot of a modern commercial jetliner in flight, its wings glinting in the sunlight.

TransDigm Group Incorporated (NYSE:TDG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 69 hedge fund portfolios held TransDigm Group Incorporated (NYSE:TDG) at the end of the fourth quarter compared to 71 in the third quarter. While we acknowledge the potential of TransDigm Group Incorporated (NYSE:TDG) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

We covered TransDigm Group Incorporated (NYSE:TDG) in another article, where we shared the list of stocks to watch as investors brace for a potential recession. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.