2024-03-09 02:10:00 ET
Summary
- RTX Corp. identified a quality issue in certain GTF engines produced in prior years which required an accelerated fleet inspection.
- Between 7/1/2023 and 9/30/2023 RTX stock fell ~26% and its market capitalization shrank by ~$37 billion.
- We believe that the market's short-term reaction to such situations as that experienced by RTX can create profitable opportunities for the patient long-term investor.
- During the three-month period when extensive reaction to the engine issue caused the price of RTX stock to drop, we accumulated shares at what we believe to be very favorable prices.
The following segment was excerpted from this fund letter.
RTX Corporation ( RTX )
On July 25, 2023, RTX Corporation (formerly Raytheon Technologies Corporation), a multi-national Aerospace & Defense company, reported that its subsidiary, Pratt & Whitney, identified a manufacturing quality issue with certain powdered metals in certain GTF engines produced in prior years, which required an accelerated fleet inspection. During its earnings conference call in July, the company indicated that the issue affected approximately 1,200 engines, 200 of which had to be inspected by mid-September because of their time in service. The remainder would need inspection over the next twelve months. The quality issue did not impact engines currently being produced. Following the July 25th disclosure of the engine issue, the price of the company's stock fell approximately 10%....
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The Olstein Funds - RTX Corporation: Crisis Creates Opportunity