Drone Budget Cycle Bet
Greg@gregthegreek
−7.3%
since Oct 1
The idea
I think drone warfare spending is becoming a permanent budget line across NATO-aligned countries, and the next two to three years of procurement cycles will drive these stocks. I lean heaviest into offensive drone makers, since every drone bought also forces someone else to buy the defense against it, so counter-drone gets funded even if the hype cools. Underneath both I hold suppliers of sensors, chips, and electronics that win regardless of which airframe wins, plus a small allocation to primes with real drone programs.
What it owns
- New defense budgets are buying attack and combat drones directly from pure-play makers as the primary mover in this sector. · AeroVironmentIts Switchblade loitering munitions are the standard order when NATO-aligned buyers convert budget allocations into procurement contracts., Kratos Defense & SecurityIt builds low-cost combat drones that militaries choose over expensive airframes when budgets get spent., Elbit SystemsIts drones have proven combat records, which drives procurement orders from Canada and European buyers when they allocate real money., Ondas HoldingsIt sells military drone platforms into NATO-aligned budget spending cycles as orders convert from allocations., Red Cat HoldingsA small military drone maker with high torque to procurement wins as the budget cycle lifts the entire offensive drone sector.34%
- Every drone fielded forces a purchase on the other side, so counter-drone systems get funded on the same budget cycles. · Leonardo DRSIt makes counter-drone systems that get funded whenever offensive drones are purchased, creating a dual revenue stream., RTX CorporationIt makes the Coyote counter-drone system already bought in volume, capturing direct counter-drone budget spending., Axon EnterpriseIts Dedrone detection systems become standard equipment for bases and airports as drone proliferation accelerates., Leidos HoldingsIt integrates counter-drone systems for the government and gets paid whenever counter-UAS stays a funded line item., AIRO Group HoldingsIt manufactures both drones and counter-drone systems, capturing both legs of the budget cycle in a smaller company.24%
- Sensors, chips and components inside drones win regardless of which maker takes the contract. · Teledyne TechnologiesIts FLIR sensors go into drones regardless of which airframe wins, capturing the supplier layer as volumes climb., Unusual MachinesWestern defense budgets increasingly require non-Chinese components, favoring US-made drone suppliers., Mercury SystemsIts defense electronics go inside both drones and counter-drone systems, earning from both sides of the budget spending., Palladyne AIIt provides autonomy software that makes cheap drone airframes useful without a pilot, a key supplier layer component., AmbarellaIts vision chips enable drones to see and navigate autonomously, winning whichever drone maker receives the contract.20%
- Large contractors with established drone and counter-drone work provide steadier returns if smaller names swing with budget cycles. · Northrop GrummanIts large drone programs like Triton move with overall defense budgets without the volatility of smaller pure-plays., TextronIt holds Army drone contracts that stay funded through the current budget cycle for drone replacement programs.10%
- Cash12%