Defense contractors

[Ulti]

https://www.defenseone.com/technology/2025/01/trumps-iron-dome-america-plan-would-put-weapons-space-big-cost/402630/

the “Iron Dome for America,” President Donald Trump’s catchphrase 

[John Hjorth]

On 2/15/2025 at 1:11 PM, dealraker said:

... I personally do not think the current administration will lower the deficit but I do sense some abrupt changes and most will be in my view to benefit some chosen individual or group linked to the decision makers.  And to me defense is just the ideal place for all this to happen.  I sense we will have some relative extreme winners and losers and I'm just not able to decide which is what. ...

 

Related to the above part of Saturdays post by Charlie in this topic and the above mentioned WaPo article, there may exist some kind of overall guidance of the future demand dynamics, and thereby future US defense spending and capital allocation, based on investor specific knowledge about each individual defense contractor :

 

Quote

... Hegseth ordered the proposed cuts to be drawn up by Monday, according to the memo, which is dated Tuesday and includes a list of 17 categories that the Trump administration wants exempted. Among them: operations at the southern U.S. border, modernization of nuclear weapons and missile defense, and acquisition of submarines, one-way attack drones and other munitions. ...

 

[dealraker]

1 hour ago, John Hjorth said:

 

Related to the above part of Saturdays post by Charlie in this topic and the above mentioned WaPo article, there may exist some kind of overall guidance of the future demand dynamics, and thereby future US defense spending and capital allocation, based on investor specific knowledge about each individual defense contractor :

 

 

A populist's daily wording massages the cult via dominating his (his, not the...because he owns it) media but may or may not be anything meaningful as to what's actually being officially discussed- particularly when Elon, the top brass of the military, and CEO's of the defense bunch are all in the process. 

 

What's happening to BAH and CACI is precisely what I thought would happen to them.  The entire defense sector is drunk driving right now and the big growthy's like the above two have so wide-wide-wide variance of where they could go as to business and stock performance.   I still own by BAH, a taxy thing, bought in the 20's long ago.  But if it had been in a tax free account you can be sure that stock would have flown the coop way above today's quote.  I'm a rare seller, but I do have eyes, ears, and a brain.

 

Budget deficits are gunna go through the roof; collections likely down; but spending is going to go places none of us can predict.  The current administration is a big spender and one for massive debts so $ is going somewhere.  You tell me where.......and I'll just laugh.  

Edited Thursday at 05:57 PM by dealraker

[Saluki]

... Hegseth ordered the proposed cuts to be drawn up by Monday, according to the memo, which is dated Tuesday and includes a list of 17 categories that the Trump administration wants exempted. Among them: operations at the southern U.S. border, modernization of nuclear weapons and missile defense, and acquisition of submarines, one-way attack drones and other munitions. ...

 

Well, my small positions in Taylor Devices and Kraken Robotics should do okay under this scenario, and there are a bunch more in the drone post I did.  I have a few shares of MIND (ship radar) I bought to remind me to study it, but the 10K was only 40 something pages and I can't find info on it, so don't want to take a big position.  There is a company in Australia that does drone jamming, but it was pricey the last time I looked and I assume that with countermeasures their tech will have to keep adapting and someone else could do the same thing too since the countermeasures will change and give new entrants an in. With regard to munitions, OLIN might benefit.  

[Ulti]

56 minutes ago, dealraker said:

Budget deficits are gunna go through the roof; collections likely down; but spending is going to go places none of us can predict.  The current administration is a big spender and one for massive debts so $ is going somewhere.  You tell me where.......and I'll just laugh.  

Yep … just watch and see how much the debt ceiling is going to be raised 

[Spekulatius]

11 hours ago, Xerxes said:

looks like in the contest between Heartland Theory and Rimland Theory, the latter has dominated military thinkers in the past 40–50 years. 

 

Think about this - the  Iron dome (reviving Reagen’s Star wars concept) presumably gutting the Army (cuts have to come from somewhere) and bumping up Nuclear armory is consistent with retreating from Europe and likely other locations while keeping control of the essential oceans. Even bullying Canada to become a US state and Greenland to become an US colony makes sense in this context.

 

Just my guess but Taiwan will be dropped in a couple of years to China in another deal, Australia , Korea and Japan have to look for themselves. They are probably still needed to keep control of the Pacific but only so long.

The nuclear arsenal buildup while also building up nuclear defense means that Trump counts on nuclear bullying to further the goals rather than boots on the ground?

 

In think investment wise, HII and to a lesser extend GD (Electric boat) are winners but their land system are a loser, LMT seems a bit on the loser side with their expensive F35 program, NOC has the IBCM contract, LHX is in a lot of subsystem everywhere and the extremely profitable radios and IR optics look like losers and their Space business is exposed to Doge cuts and SpaceX competition.

 

Interesting times. I think the European defense cos have much better prospects but a lot of it is now baked in.

[Gamecock-YT]

11 hours ago, John Hjorth said:

 

 

Is this how the United States of America treats its veterans going forward and into the future?

 

Been that way since Vietnam. We send our lower class citizens to foreign lands in the name of freedom and democracy only to abandon them when they return home, beyond the token 'thanks for their service' whenever the opportunity arises for the upper class or brands to 'wrap themselves in the flag' and profess how much they love 'freedom'.

 

Is it any wonder that vets routinely kill themselves (and others) after returning home? 

 

Oh yeah, we probably will get around to also cutting their PTSD therapy once DOGE finds out about it.

Edited yesterday at 01:56 AM by Gamecock-YT

[Spekulatius]

Himars without activation code:

 

You must be stupid to buy US weapons nowadays. Europe really has an opening to export their defense products to India, Japan, BRICS etc.

Edited yesterday at 02:15 AM by Spekulatius

[Xerxes]

2 hours ago, Spekulatius said:

Think about this - the  Iron dome (reviving Reagen’s Star wars concept) presumably gutting the Army (cuts have to come from somewhere) and bumping up Nuclear armory is consistent with retreating from Europe and likely other locations while keeping control of the essential oceans. Even bullying Canada to become a US state and Greenland to become an US colony makes sense in this context.

 

Just my guess but Taiwan will be dropped in a couple of years to China in another deal, Australia , Korea and Japan have to look for themselves. They are probably still needed to keep control of the Pacific but only so long.

The nuclear arsenal buildup while also building up nuclear defense means that Trump counts on nuclear bullying to further the goals rather than boots on the ground?

 

In think investment wise, HII and to a lesser extend GD (Electric boat) are winners but their land system are a loser, LMT seems a bit on the loser side with their expensive F35 program, NOC has the IBCM contract, LHX is in a lot of subsystem everywhere and the extremely profitable radios and IR optics look like losers and their Space business is exposed to Doge cuts and SpaceX competition.

 

Interesting times. I think the European defense cos have much better prospects but a lot of it is now baked in.

White House is rolling up the empire and going under a big beautiful shell, like a turtle. While doing a pivot to Russia to pull it back from PRC’ orbit. I do think there is a huge bipartisan support when it comes to Taiwan. TSMC is a critical node and status quo needs to remain. 

I think the animosity toward manned aircraft is a prelude for Elon getting into the business. But not sure it will happen. F-35 has a lot of it bits coming from various states, so Congressmen need to be ok with their district losing jobs. There is also an export market with F-35 that is flourishing. Sure, who wants an F-35 if the home manufacturer has an override button. But that could be short term. 
 

I think Lockheed will survive this and like its portfolio (Sikorsky, missiles, classified, legacy F16 etc) better than GD. If I am wrong and F-35 are impacted and are really at risk, will it be immediate ? Not sure it will. 

[Spekulatius]

Well naval power has to be an air power too, those two go hand in hand since WW2 and the domina d of rh aircraft carrier. The US Navy is basically designed around carrier groups. So the F-35 needs to work.

 

It’s less clear for export markets. The F-35 hardware isn’t too expensive but it’s very expensive to fly and to maintain. I think there is a large market for aircraft somewhat  heat simpler and plains that are easier to get on the air and log flight hours necessary to remain effective. After all a bird on the ground or runway is just an easy target. Lockheed does have the F-16 that is still getting upgrades for that but there are other more modern contenders too.

 

I could well see GD split their ship and submarine business from land system and IT. I don’t think the latter ones have a great future and even if you look at GD as a whole, the business has stagnated for many years basically.

Edited yesterday at 12:15 PM by Spekulatius

[Spekulatius]

On manned aircraft, we are probably one generation of aircraft away from going unmanned. The reason is simple, humans have physical limits (g forces, attention spans, reaction times) that can be overcome with an intelligent control system. So you have a preprogrammed mission and the intelligence or AI will decide the tactical execution on the go.

 

I think it’s inevitable because humans just can react fast enough or handle the g forces that planes to generate with modern flight control system to evade threads or maneuvers against enemy aircraft or obstacles. Planes are networked computer that also fly nowadays anyways so it makes sense to do away with humans if these AI systems get good enough.

 

Then the airplanes and drones basically become the same thing.

Edited yesterday at 12:26 PM by Spekulatius

[sleepydragon]

21 hours ago, dealraker said:

A populist's daily wording massages the cult via dominating his (his, not the...because he owns it) media but may or may not be anything meaningful as to what's actually being officially discussed- particularly when Elon, the top brass of the military, and CEO's of the defense bunch are all in the process. 

 

What's happening to BAH and CACI is precisely what I thought would happen to them.  The entire defense sector is drunk driving right now and the big growthy's like the above two have so wide-wide-wide variance of where they could go as to business and stock performance.   I still own by BAH, a taxy thing, bought in the 20's long ago.  But if it had been in a tax free account you can be sure that stock would have flown the coop way above today's quote.  I'm a rare seller, but I do have eyes, ears, and a brain.

 

Budget deficits are gunna go through the roof; collections likely down; but spending is going to go places none of us can predict.  The current administration is a big spender and one for massive debts so $ is going somewhere.  You tell me where.......and I'll just laugh.  

dealraker, thanks for your insights.

when i was in college (decades ago), as a computer science major, i vaguely remembered BAH came to campus to recruit. The consensus among the students are consulting companies built software for other companies , and thus has no great future. You want to work for companies that build products for themselves. That’s what keeping me from buying CACI and i bought LMT instead. However, CACI’s price is down so much recently it does look very appealing and i found myself keep looking at it.

 

 

[sleepydragon]

3 hours ago, Spekulatius said:

On manned aircraft, we are probably one generation of aircraft away from going unmanned. The reason is simple, humans have physical limits (g forces, attention spans, reaction times) that can be overcome with an intelligent control system. So you have a preprogrammed mission and the intelligence or AI will decide the tactical execution on the go.

 

I think it’s inevitable because humans just can react fast enough or handle the g forces that planes to generate with modern flight control system to evade threads or maneuvers against enemy aircraft or obstacles. Planes are networked computer that also fly nowadays anyways so it makes sense to do away with humans if these AI systems get good enough.

 

Then the airplanes and drones basically become the same thing.

isnt F35 (or maybe the next generation) you can have just plane that’s piloted , which control 5 other planes that are unpiloted. I think I read about this somewhere.

[John Hjorth]

14 hours ago, Gamecock-YT said:

Been that way since Vietnam. We send our lower class citizens to foreign lands in the name of freedom and democracy only to abandon them when they return home, beyond the token 'thanks for their service' whenever the opportunity arises for the upper class or brands to 'wrap themselves in the flag' and profess how much they love 'freedom'.

 

Is it any wonder that vets routinely kill themselves (and others) after returning home? 

 

Oh yeah, we probably will get around to also cutting their PTSD therapy once DOGE finds out about it.

 

Thank you for your reply here, @Gamecock-YT.

 

Food for thought.

[Xerxes]

1 hour ago, sleepydragon said:

isnt F35 (or maybe the next generation) you can have just plane that’s piloted , which control 5 other planes that are unpiloted. I think I read about this somewhere.

that would be the family of Collaborative Combat Aircraft that would have been linked with manned-NGAD. (I think it was manned)

 

NGAD was being pushed back even before new administration took over. I think only Boeing and Lockheed were bidding on it. And the latter very reluctantly. Northrop bowed out couple of years back. 

 

in all likelihood CCA will move forward. Believe Andruil involved in that. But let us not forget that if CCA will be anything it would need the industrial muscle of the prime contractors. 

Edited yesterday at 04:46 PM by Xerxes

[lnofeisone]

2 hours ago, sleepydragon said:

dealraker, thanks for your insights.

when i was in college (decades ago), as a computer science major, i vaguely remembered BAH came to campus to recruit. The consensus among the students are consulting companies built software for other companies , and thus has no great future. You want to work for companies that build products for themselves. That’s what keeping me from buying CACI and i bought LMT instead. However, CACI’s price is down so much recently it does look very appealing and i found myself keep looking at it.

 

 

BAH is a pure play gov't consulting (though they have been trying to build their asset plays). LMT's IT competes with BAH. The rest of LMT doesn't.

 

In many ways, CACI and LMT are similar. Both sell military hardware and offer consulting that focuses on armed forces IT. CACI's consulting is about 50%, and LMT's is about 25%. 

[Xerxes]

2 minutes ago, lnofeisone said:

BAH is a pure play gov't consulting (though they have been trying to build their asset plays). LMT's IT competes with BAH. The rest of LMT doesn't.

 

In many ways, CACI and LMT are similar. Both sell military hardware and offer consulting that focuses on armed forces IT. CACI's consulting is about 50%, and LMT's is about 25%. 

where do you get that Lockheed has IT business worth quarter of its entire business. I see aeronautics, missile & defense, rotary (which Sikorsky) + ULA and space-related assets. 
 

Might be that you are talking about GD ?

[lnofeisone]

17 minutes ago, Xerxes said:

where do you get that Lockheed has IT business worth quarter of its entire business. I see aeronautics, missile & defense, rotary (which Sikorsky) + ULA and space-related assets. 
 

Might be that you are talking about GD ?

You are right. I had to refresh my memory. LMT merged its consulting with Leidos about 10 years ago and absorbed whatever was left. LMT is a product company that provides services around products, so it is the complete opposite of BAH. CACI is somewhere in the middle. 

[Xerxes]

Cheers 

[Paarslaars]

Anyone looking at defense contracters specifically to the EU? Trump is really making european politicians wake up and they will seriously need to invest in a EU army to scare off Putin.

 

Edit: nvm reading through the thread got me some answers, going to look a bit further.

Edited 22 hours ago by Paarslaars

[grc1980]

I’m currently looking at 3 UK

1. Cohort plc 

2. BAE Systems

3. QinetiQ Group.

 

BAE as they do munitions and vehicles as do QinetiQ but Cohort as they are buying niche defence companies such as anti drone and sonar tech.

 

still digging into them.

[Spekulatius]

8 hours ago, sleepydragon said:

isnt F35 (or maybe the next generation) you can have just plane that’s piloted , which control 5 other planes that are unpiloted. I think I read about this somewhere.

Could well be an intermediate step, but then the human is still the bottleneck. Also why does the human need to fly and expose himself rather than go all the way to AI with human as a backup in cubicle or VR workstation somewhere? I don’t think fighter pilots have a long future in their job.

 

How can a human fighter pilot  win against an airframe with an AI designed to maneuver with 30G when a human only can take 10G for a few seconds before fainting?

Edited 17 hours ago by Spekulatius

[sleepydragon]

https://defensescoop.com/2025/02/20/dod-review-consulting-contracts-cuts-trump-priorities-doge/
 

 

[Hektor]

9 hours ago, sleepydragon said:

https://defensescoop.com/2025/02/20/dod-review-consulting-contracts-cuts-trump-priorities-doge/
 

 

Thanks @sleepydragon. I guess such directives to review/eliminate consulting contracts will be issued at other/all federal agencies. Any idea what constitutes essential vs non-essential?

[lnofeisone]

1 hour ago, Hektor said:

Thanks @sleepydragon. I guess such directives to review/eliminate consulting contracts will be issued at other/all federal agencies. Any idea what constitutes essential vs non-essential?

I can say with confidence that O&M is usually considered essential. No clue what non-essential will be.