Sell Half of FTAI Aviation (FTAI); Hold Loar (LOAR)
Our two plays in the commercial aerospace aftermarket, Loar (LOAR) and FTAI Aviation (FTAI) have come under pressure lately. Why?
There’s been more scrutiny around aerospace and defense stock valuations, some uncertainty about defense contracts given Trump’s agenda to slash government spending (not specific to our plays but affecting the broader space) and the resumption of Boeing (BA) 737 production, decent 787 forecast for December and the end of Boeing’s worker strike.
Recall that supply chain constraints have troubled the commercial aerospace market, and we jumped into our two stocks largely because they benefit when new plane production falls below demand and older aircraft are kept flying for longer. FTAI in particular has been an incredible performer for us, still up over 120% since we jumped on board in March.
Regarding LOAR, one of the reasons for that stock’s recent drawdown is a secondary stock offering this week, priced at 85. The stock’s current price, near 80, “should” be a short-term phenomenon.
Admittedly, I’ve fallen in love with FTAI. But, barring a late-day rally, I don’t like that the stock is on track to close well below its 50-day line for the first time in over a year.
I’m not going to overthink this. Let’s book partial profits of roughly 125% to 130% by selling half our stake in FTAI Aviation today. SELL HALF
And LOAR moves to hold. We have about a 7% gain on the first half of our position (I still haven’t added the second half) and I’d like to give this secondary offering another day or so to work its way through. But I’ll be watching that one closely as well. HOLD
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