Defense

The post-Cold-War "peace dividend" is structurally over. Great-power competition with China, a re-armed Europe, persistent Middle East kinetic conflict, and the visible inadequacy of legacy primes against modern threat profiles have all combined to expand the defense procurement envelope for at least a decade. This is not a cyclical defense rally; it is a generational re-pricing of national-security spend.

Inside that envelope, the value is shifting away from cost-plus prime contractors toward software-defined, mission-specific, attritable hardware. Anduril-class companies, hyperscaler-style compute pulled into theatre, unmanned systems at every altitude, hypersonic capability — these are absorbing budget share faster than the historic primes can defend it. Where the prime stack is still durable (large platforms with multi-decade contracts) we underwrite cash generation; where it is being challenged (mid-stack ISR, autonomous swarms, electronic warfare), we underwrite the disruptors.

The investable surface is still narrow on public markets. Many of the most consequential defense-tech companies remain private (Anduril, Shield AI, Hadrian, Saronic). This makes the public defense universe an asymmetric watchlist: small mid-cap primes adapting fast are mispriced down, large primes are mispriced for stability they no longer have, and the few public pure-plays in unmanned / hypersonics / counter-drone are mispriced for the contract velocity that's actually accruing.

Edge sources we lean on: (1) congressional disclosure flow — defense-committee members frequently telegraph appropriations direction via personal trades; (2) primes-vs-newcomers contract-award analysis from DoD and FOIA-released programme data; (3) the 13F book of funds that historically nail defense cycles (e.g., long-duration value managers loading primes; growth funds rotating into Palantir / Kratos / AeroVironment).