Europe's Rearmament Cycle
Jason@nolovedeepweb
+1.3%
since Oct 16
The idea
I believe Europe is in a multi-decade rearmament cycle, with NATO spending pledges forcing a build-out of factories, munitions and vehicles that outlasts any single headline. To own that build-out from US exchanges, this take blends European defense ETFs, US companies already winning European orders, the metals and parts suppliers every factory needs, and defense-tech hardware like drones. It's spread across those layers rather than bet on one name, holds years not months, and keeps a small cash reserve while the industrial buildout plays out.
What it owns
- These companies already supply air defense systems, aircraft and electronics to European militaries, so rising European budgets show up directly in their order books. · RTX CorporationIts Patriot air defense system is the choice European countries continue to order, and its missile production capacity is part of the supply constraint driving this take., Elbit SystemsIt sells artillery, rocket launchers and ammunition to European armies restocking after years of underinvestment., Lockheed MartinEuropean air forces are purchasing its F-35 fighters and PAC-3 missiles, and European governments are selecting it for military satellite work., Leonardo DRSIt is the US-listed subsidiary of Italy's Leonardo, one of Europe's major defense makers, and builds sensors and counter-drone equipment that militaries are ordering., General DynamicsIts European Land Systems unit manufactures the armored vehicles European armies are buying after years of budget constraints., L3Harris TechnologiesIt makes radios, sensors and rocket motors integrated into many of the defense systems European militaries are acquiring.29%
- New shells, missiles and aircraft all require specialty alloys, forgings and components, and the capacity to produce them remains constrained. · ATI Inc.It produces titanium and specialty alloys essential for jet engines, airframes and armored vehicles, materials that defense production cannot substitute., Carpenter TechnologyIt makes high-end alloys for jet engines and weapons systems with few alternative suppliers, so expanded defense spending increases demand for its hard-to-replace materials., Howmet AerospaceIt makes forged parts and fasteners for jet engines and airframes that every new fighter and transport aircraft Europe orders requires., HexcelIt produces carbon fiber and composites used in fighter jets, helicopters and missiles, materials needed as Europe increases aircraft and weapons production., Karman HoldingsIt manufactures components that go into missiles and rockets, products in high demand as Europe restocks weapons systems., ArcelorMittalEurope's largest steelmaker benefits from the continent's rearmament and the rebuilding of defense production capacity, both of which require substantial steel volumes.24%
- Europe's governments are directing most new defense spending toward their own arms makers, and these funds flow into the companies held by this fund. · Select STOXX Europe Aerospace & Defense ETFIt holds Europe's major aerospace and defense makers like Rheinmetall, BAE, Leonardo, Thales and Saab, providing US-based access to companies that mostly trade over the counter domestically., Themes Transatlantic Defense ETFIt holds a basket of defense makers across the Atlantic, spreading the European rearmament bet across more companies than a single-region fund.22%
- The conflict in Ukraine exposed Europe's need for drones and counter-drone systems at scale, and these companies manufacture both. · AeroVironmentIt makes Switchblade loitering drones and counter-drone systems that Ukraine demonstrated Europe needs in volume., Kratos Defense & Security SolutionsIt builds low-cost drone aircraft and target drones, the type of hardware militaries prefer to acquire in large quantities instead of fewer expensive jets., Teledyne TechnologiesIts FLIR division manufactures the Black Hornet pocket drone and thermal sensors that European armies purchase for reconnaissance and targeting., Ondas HoldingsIt builds systems designed to detect and disable enemy drones, addressing a critical need as unmanned aircraft proliferate on European battlefields.18%
- Cash7%