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Policy Focus: Defense Spending

04.14.2019 | Ben Phillips, CFA

Policy Focus Defense SPending

The Policy in Focus series highlights a new policy driven investment theme (legislation or regulation) our team is monitoring. You can subscribe to the Weekly Market Recap to receive this report each week and visit www.EventSharesFunds.com for our investment solutions. 



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Background: Defense Spending


• Companies with products that advance the technological capability of the U.S. military may see new revenue growth as the Pentagon and defense hawks push to modernize the military after years of lower defense budgets in the Obama administration.


• Additionally, the Trump administration has previously issued an executive order to speed up and deregulate the process of defense industry sales to foreign allies.



Our Take & Timing: The Opportunity


This is a long tail policy. It starts with Treasury disbursing the money to fund defense contracts, which allows prime contractors to start projects and suppliers to prime contractors to support the primes. The process can take years from start to finish, which makes it important to not get caught up in year-to-year funding battles. With that being said, its all about the budget for FY2020 and FY2021 right now.




LEARN MORE: This research is a byproduct of our active ETF.




Charts: Trading Range & Relative Performance




Impacted Companies: Stocks to Watch


  • Defense Primes: LMT, RTN, NOC, BA, HII, BWXT
  • Defense Suppliers: AVAV, FLIR, AJRD, KTOS, OSIS
  • Aircraft Parts: UTX, TDG, HXL, HON, TXT, MOG.A
  • Outsourced IT & Consulting: BAH, LDOS, CACI, ICFI, SAIC
  • EventShares manages a portfolio of our best ideas.



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About EventShares


EventShares is an investment management firm dedicated to translating legislation and regulation coming out of Washington D.C. into real world investment solutions. The firm's goal is to provide its clients with attractive, long-term results by following a disciplined and differentiated approach to investing.

Headquartered in Newport Beach, CA EventShares serves individuals, financial advisors, as well as institutions and offers its sophisticated investment strategies through active ETFs and separately managed accounts (SMAs).


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