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How to play the defense sector amid growing global conflict
How to play the defense sector amid growing global conflict

Yahoo

time25-06-2025

  • Business
  • Yahoo

How to play the defense sector amid growing global conflict

Defense stocks are holding steady even as global tensions persist. Tony Bancroft, Gabelli Funds Aerospace and Defense ETF portfolio manager, joins Market Domination to explain how long-term instability could keep demand for US weapon systems high. To watch more expert insights and analysis on the latest market action, check out more Market Domination here. I want to talk, um, we look at defense stocks, Tony, and I I'm going to use the ITA here, the ETF that tracks the sector. What's interesting, Tony, is I I look at it at a strong run. It's up about 25% this year, but it actually hasn't done all that much, Tony, since Israel first hit Iran a couple weeks ago. Is that because, Tony, of the run before that or is it because investors have concluded, listen, the the fight is over? What do you make of that? Yeah, uh, it's great to be back, Josh, and we're here at the, uh, Morningstar Investor conference out in Chicago. Um, you know, there's a lot of interest in aerospace and defense, you know, uh, our, uh, Fidelity commercial aerospace and defense, the PF Gcad, so we're up, uh, you know, we're up, uh, quite a bit this year as well, around, uh, 20% or so. But but I think, you know, there's been a big run and, um, obviously with, uh, you know, Boeing and the Air India, uh, mishap, there's probably going to be some, uh, you know, some probably some some cheap ships, people taking money off the table until that gets the preliminary finding, uh, you know, comes down in about 30 days. And then, you know, this the peace deal that was brokered yesterday, I think some people think that's, you know, uh, there'll be some somewhat some peace in the Middle East for the near term, but I think long term, there's probably going to be more volatility than less, all things being equal. But you heard President Trump talk about to be fully backing, um, NATO this morning at the summit. And, you know, if NATO goes with 3.5% of GDP, that's a $500 billion increase on the NATO's, uh, NATO's budget from 1.5 billion to almost two trillion. So or 1.5 trillion to two trillion. So there's a lot of growth in the industry, you know, we've heard all the stories about, uh, uh, Ukraine using, uh, seven years of javelin, stinger and Himar, uh, uh, weapon systems in one year. And there's just a need to restock and, uh, for Europe to build its defensive as well as the US. Did you see that war in the Middle East, Tony? I'm just curious as you were watching that unfold. Did that potentially represent any kind of inflection point for the industry just in terms of of how defense spending gets allocated, where money goes, how it how it how it flows to which sectors, to which companies? Could there be changes that result from that? You know, I think in the long run, I think unfortunately, it's probably going to stay relatively unstable, unfortunately. Uh, I think this, uh, you know, the strike on, uh, the Fordo and other, uh, enrichment facilities is a huge win for, um, you know, our our allies. Um, you don't need another nuclear, um, another nuclear player in in the world. Uh, but I I I sense that in the long term, we're going to still need I look at I look at defense spending as CapEx. It's just it's just a need to, uh, for to keep a going concern for a country for, you know, uh, for for for a country that believe in, you know, uh, rule of law and and, you know, individual freedom. I just think it's going to be needed and, you know, the US is the largest supplier. We're, you know, uh, we export $300 billion annually in weapon systems. Uh, we're, you know, 60% of the global exports, uh, comes from the US. So we're going to see, I think we're going to see continued, uh, demand for our weapon systems and they're the best weapon systems in the world. So, um, and have the longest logistics chains and, you know, you name it. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

How drones & AI are changing the defense sector & warfare
How drones & AI are changing the defense sector & warfare

Yahoo

time09-06-2025

  • Business
  • Yahoo

How drones & AI are changing the defense sector & warfare

The growing frequency of wartime drone attacks is causing a shift in the nature of both the defense sector and modern warfare. Tony Bancroft, Gabelli Funds portfolio manager, joins Asking for a Trend with Josh Lipton to discuss the outlook for the use of drone technology, artificial intelligence (AI), and automation in warfare. Bancroft also shares some of his top stock picks in the defense sector, including parts-makers like Textron (TXT), Honeywell (HON), L3Harris (LHX), and Ducommun (DCO). To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. There's a shift on the horizon in modern warfare. Ukraine recently dealt a blow to several Russian air bases with the use of drone attacks. As of February 2025, tactical unmanned aerial vehicles account for 60 to 70% of damaged and destroyed Russian systems. That's according to the Royal United Services Institute. For more on the changes to modern warfare and ripple effects for the defense sector, we have Gubelli Funds portfolio manager Tony Bancroft. Tony, it is always good to see you and the reason, of course, Tony, you are the perfect guest for this segment, is not only are you well-known analyst, you are in fact Lieutenant Colonel, uh, Tony Bancroft, United States Marine Corps. So, we we are lucky to have you. And I want to start, Tony, with those reports we saw, uh, Ukraine's really unprecedented drone operation striking deep inside Russian territory. When you saw that, Tony, when you saw those reports, what was your reaction? Thanks, Josh. Always great to be back. And you know, I think, you know, Ukraine, uh, one-upped, um, Israel on on next, uh, next level next generation, uh, warfare and you know, the US Department of Defense has taken notes, uh, and this is how things are going to be going, uh, going forward. Uh, you're going to see a lot of, uh, asymmetric warfare, obviously a lot of use of of drones and and, uh, you know, artificial intelligence and, um, cyber, you know, cyber attacks, uh, you name it. Uh, however you can imagine it is going to be how it's going to be done. And you know, that was just sort of a case in point the fact that, you know, 117, you know, how many or $1,000 drones took out a third of the, uh, third, second or third largest air forces' um, uh, strategic bomber capability is is legitimate. So, you're going to see drones, you know, be be a lot of DOD and European spending going forward. I think right now it's about 15 billion in the US DOD budget, um, and it's probably going to go to 25 billion as expected about by 2030 and and doubling that almost in 2035. So I think we we we like the industry, we like the, uh, companies that are going to supply parts to them and, uh, we're we're definitely, you know, bullish on it. What are some of those companies, Tony? Yeah, you know, we we sort of like the the parts maker. I mean, you know, I know there's a lot of drone suppliers out there but, uh, you know, companies like, um, Textron and Honeywell and L3 Harris, um, Ducommun, uh, all make, you know, all sort of make these parts that go into all these, you know, these systems that are obviously, you know, they're pretty, you know, they're pretty, uh, intricate, uh, high technology systems that need certain structures and certain, uh, electronics in them and we sort of like those those guys. And they're diversified as well because they're on multiple programs and they're also on the commercial side. And, uh, they're they're good cash flow businesses with, you know, long secular tailwinds. I have to ask you a broader question, maybe, you know, as as you talk about how you you think maybe the the future battlefield changes and yes, it'll still involve tanks and fighter jets and battleships that more increasingly rely on AI and autonomous systems. Is the US well prepared for that shift, Tony, in your opinion? You know, I think they are. I think the US is actually, um, I I I I I think sometimes, you know, the the narrative is that the US is is fighting the last battle and and and and it's somewhat true. And that's somewhat true always when you talk about, you know, warfare. I'm sure all the way back to to Sun Tzu and and you name it. Uh, but the US is pretty capable and the weapon systems we have are are are lethal and you know, we're still by far the largest drone builder in the world. I mean there's, you know, as far as for military drones. Um, you know, uh, the US is is the most dominant. Always have been and I think will we will continue to be. And we'll we'll we'll sort of we'll pair that with, uh, you know, with our with our manned systems that are able to control it. You know, a lot of this is going to come down to as as we go further into it, you know, who is going to be able to essentially out hack who or who is going to be able to jam out jam who. And at some point you're probably going to need, you are going to need some type of, uh, manned manned system that can be closest, you know, the node they would they would call it, be closest to, uh, you know, the the autonomous systems or or things that are are capable of being jammed. And you're you're going to need the systems that the US has like the F-35 along with our, you know, the collaborative, uh, collaborative combat aircraft and other and other systems. There's a lot that we have and our long-range fires are by far dominant, you know, when when it comes to, um, being able to reach out and touch somebody. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

How drones & AI are changing the defense sector & warfare
How drones & AI are changing the defense sector & warfare

Yahoo

time07-06-2025

  • Business
  • Yahoo

How drones & AI are changing the defense sector & warfare

The growing frequency of wartime drone attacks is causing a shift in the nature of both the defense sector and modern warfare. Tony Bancroft, Gabelli Funds portfolio manager, joins Asking for a Trend with Josh Lipton to discuss the outlook for the use of drone technology, artificial intelligence (AI), and automation in warfare. Bancroft also shares some of his top stock picks in the defense sector, including parts-makers like Textron (TXT), Honeywell (HON), L3Harris (LHX), and Ducommun (DCO). To watch more expert insights and analysis on the latest market action, check out more Asking for a Trend here. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data

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