An investment blog written by Chad Brand, President of Peridot Capital Management

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Backlogs Are Overrated

Posted on May 30, 2008

Just a quick note before I head out for the weekend. In the face of oil peaking at $135 per barrel in recent days we have seen many of the airlines cancel planned deliveries of new planes they were going to add to their fleets over the next few years. Those plane orders are now unnecessary as the carriers are cutting capacity.The big point here is that investors often go gaga over industrial suppliers' backlog. The longer the backlog the more predictable their revenue stream over the longer term, or so the investors would have you believe. Due to long lead times customers do have to place orde...

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