What Makes Standard Aero (SARO) an Exciting Position in Middle Coast Investing’s Portfolio?

Middle Coast Investing, an investment advisor firm, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The letter explores the concept of ‘meme’ introduced by Richard Dawkins and its impact on modern stock market trends. It highlights how memes, such as Large Language Models (LLMs), artificial intelligence (AI), rising gas prices, private credit, and automated driving, play a crucial role in shaping trading decisions and driving quick ideological changes. However, Investment decisions should not be driven by current news cycles or fads, but rather focus on businesses that are resilient in tough times and capable of leveraging their advantages. These principles require discipline, especially in a volatile market environment. The US portfolio returned -3.9% in the quarter vs. -4.6% for the S&P 500, Core U.S. portfolios returned -4.3% vs the Russell 2000’s 0.6% return, S&P 600’s 3.1%, and Nasdaq’s -7.1% returns. Additionally, European Portfolios returned -2.9% during the same period. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.

In its first-quarter 2026 investor letter, Middle Coast Investing highlighted stocks such as StandardAero, Inc. (NYSE:SARO). StandardAero, Inc. (NYSE:SARO) is an aerospace engine aftermarket services provider for fixed and rotary wing aircraft. On April 16, 2026, StandardAero, Inc. (NYSE:SARO) closed at $26.01 per share. One-month return of StandardAero, Inc. (NYSE:SARO) was 1.60%, and its shares gained 2.08% over the past 52 weeks. StandardAero, Inc. (NYSE:SARO) has a market capitalization of $8.65 billion.

Middle Coast Investing stated the following regarding StandardAero, Inc. (NYSE:SARO) in its Q1 2026 investor letter:

“StandardAero, Inc. (NYSE:SARO) is one of our three new positions, and maybe the one I am most excited about, even though for now the position is small. Aerospace has been a winning sector – as seen in our Astronics position – as the major players, Boeing and Airbus, ramp up production to catch up with gaps from COVID era issues as well as safety problems, such as Boeing’s 737 Max. As our other position AerCap reminds us, there is still a years-long backlog in demand for new planes.

Standard Aero’s business is to repair and maintain planes. As long as there is demand for planes, the value of currently flying planes will remain high, and thus keeping them working will remain high. On top of that, Standard Aero is certified to work on LEAP engines, a new type of plane engine that should help grow Standard Aero’s revenues.

Those revenues have grown by an average 15% the last two years. The growth is forecast to slow this year due to an accounting change, but one which should lead to improved profitability. The shares trade for less than 15x EV/EBITDA, which is significantly cheaper than aerospace peers. As Astronics shares have gotten pricey, we have sold a decent part of our position, and StandardAero is a way to keep exposure to the long-term aerospace cycle, but at a better price.”

StandardAero, Inc. (NYSE:SARO) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 41 hedge fund portfolios held StandardAero, Inc. (NYSE:SARO) at the end of the fourth quarter, compared to 44 in the previous quarter. While we acknowledge the potential of StandardAero, Inc. (NYSE:SARO) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered StandardAero, Inc. (NYSE:SARO) and shared the list of best stocks to buy and hold for the next 10 years. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

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