American Renaissance model basket

Defense Primes

A concentrated book of US and allied primes, aerospace structures, and mission electronics.

What is the thesis for Defense Primes?

We own the platform integrators and the irreplaceable sub-tier suppliers behind them. The thesis rests on a multi-year upward revision to defense outlays across NATO and the Indo-Pacific, coupled with an aerospace production cycle that is still rebuilding after a decade of under-investment.

This is a curated QuantLink model basket. It is not a filed portfolio, not a fund, and not investment advice.

Published Apr 14, 2026. Updated Apr 14, 2026. Source: QuantLink curated model basket and FastAPI ideas endpoint.

Holdings
12
Benchmark
SPY
Status
Featured
1Y model return
+7.4%

Performance as of Oct 11, 2026.

Thesis narrative

The question

Are defense primes and their sub-tier aerospace suppliers priced for a one-off budget bump, or for a sustained multi-year step-change in procurement and O&M spending across the United States and its treaty allies?

Base rates

The reference class is prior re-armament episodes in peacetime democracies: the Reagan buildup of 1981-1986, the post-9/11 expansion of 2002-2008, and the NATO response to 2014. In each case, prime-contractor revenue grew roughly 6-10% annually for five-to-seven years, operating margins expanded 150-300 basis points, and backlog-to-revenue ratios drifted from ~1.3x to ~2.0x before plateauing. The equity base rate for a diversified basket of primes during these cycles has been roughly the 70th percentile of industrial subsectors for the first four years, then converges to index returns as the cycle matures.

For aerospace structures and propulsion sub-tiers, the base rate is less flattering in the first two years of a cycle -- they absorb supply-chain stress and working-capital drag -- and considerably better in years three through six, when rate increases finally monetize. The commercial aerospace cycle has historically run on a 7-9 year up-leg; the current one began mid-2020 and has been interrupted twice, leaving the cumulative delivery deficit versus trend at roughly 1,500 narrowbodies.

The imputed probability embedded in forward consensus is that NATO European defense budgets plateau near 2.5% of GDP by 2028. Several member states have already legislated trajectories that clear 3%. The consensus forward is a reasonable central case; it is not a reasonable upper bound.

Why the consensus view is wrong (or incomplete)

The sell-side models the budget as the binding constraint. In the current cycle, the binding constraint is industrial capacity -- skilled labor, forging capacity, solid rocket motor throughput, shipyard dry-docks. Primes are turning away orders. When the constraint shifts from demand to supply, the economics of the sub-tier improve faster than the economics of the integrator, because sub-tier pricing power rises with utilization while prime margins are capped by cost-plus and firm-fixed-price mechanics on legacy programs.

The second piece the consensus misses is munitions replenishment. The combined NATO drawdown of guided munitions since 2022 will take roughly a decade to replace at current contracted production rates. That is a known, scheduled, and funded stream of revenue that does not require any assumption about future conflict. The market still prices this segment as cyclical.

Third, the commercial aerospace recovery is structurally entangled with defense through shared suppliers (forgings, castings, engine components). A Boeing narrowbody rate increase from 38 to 57 per month pulls on the same machining capacity as an F-35 rate hold. We own the shared bottlenecks directly.

Position construction

The book has two 20% anchors and three sub-books.

Anchors. BA at 20% is a production-rate recovery call; the incremental unit economics as 737 MAX rate moves toward 57/month are the strongest single driver in the book, and the defense segment is a free option. HWM at 20% is the purest read on the shared commercial-defense bottleneck in engine rings, fasteners, and structural forgings -- a business whose incremental margins on volume are the highest in aerospace.

Integrated primes and mission systems (~32%). LHX at ~15.5% captures communications, electronic warfare, and space payloads at a multiple that still embeds legacy program-execution risk the company has largely worked through. TDY at ~7.7%, CW at ~6%, and HII at ~3.2% round out the integrator exposure across instrumentation, naval nuclear components, and shipbuilding. TXT at ~4.2% adds rotorcraft and the Beechcraft trainer franchise.

Propulsion, motion control, and electronics (~7.5%). WWD (~4.3%) and MOG-A (~1.9%) are the propulsion and actuation specialists where rate leverage is highest. MRCY (~1.3%) is the embedded-computing sub-tier where the multiple is still depressed from a prior execution stumble.

Allied and asymmetric (~15.8%). ESLT at ~6.5% is the cleanest allied-market exposure with direct benefit from European ground systems replenishment. RKLB at ~9.3% is the asymmetric position -- small launch and neutron development, with optionality on national-security payloads.

Asymmetric payoff

If NATO defense spending tracks legislated paths and Boeing hits 57/month on the MAX by late 2027, the weighted book returns roughly 18-28% annualized over three years. If budgets flat-line at current dollars and narrowbody rate slips by a year, the book returns roughly zero to -10%. If a second supplemental or a Pacific contingency package moves through in 2026 or 2027, the right tail is 35-50% with modest multiple expansion.

At 55% base, 25% bear, and 20% bull, expected value is roughly +14 to +20% annualized versus an SPY base rate near +8%. The payoff is asymmetric because backlog and multi-year contracts limit the bear-case revenue damage while supply-constrained pricing creates open-ended upside in the sub-tier.

Three things that would change our mind

  1. A US continuing resolution extending past March that forces program starts and multi-year procurement authorities to slip, with language suggesting a broader budget-control framework is returning.
  2. Boeing 737 MAX delivery cadence falling below 32/month for two consecutive quarters with management citing supplier rather than internal quality causes, signalling the sub-tier is cracking rather than tightening.
  3. European member states legislating caps or delays to announced 3%-of-GDP paths, indicating the budget trajectory is political theatre rather than a committed procurement pipeline.

What we are explicitly NOT betting on

We are not betting on any single program win -- NGAD, Sentinel, Columbia-class, or a specific munitions award. We are not betting on a particular conflict. We are not betting on small pure-play unmanned or counter-UAS names whose revenue has not yet cleared the threshold where the sub-scale-industrial base-rate disadvantage reverses. The thesis requires only that allied spending stays on its announced path and that commercial aerospace rates continue to recover. Both are strictly weaker claims than picking winners, and the book is sized for them.

Model basket holdings

Model basket: curated equal or target weighting, not a filed portfolio. Weights are the target basket weights returned by the live ideas endpoint.

NameSymbolModel weight
L3Harris Technologies, Inc.LHX15.52%
Curtiss-Wright CorporationCW6.00%
Teledyne Technologies IncorporatedTDY7.70%
Huntington Ingalls Industries, Inc.HII3.21%
Textron Inc.TXT4.24%
Mercury Systems, Inc.MRCY1.32%
The Boeing CompanyBA20.00%
Howmet Aerospace Inc.HWM20.00%
Rocket Lab USA, Inc.RKLB9.28%
Elbit Systems Ltd.ESLT6.50%
Woodward, Inc.WWD4.34%
Moog Inc.MOG-A1.89%

Backtested performance vs SPY

Performance is backtested from the returned tearsheet series. It reflects the model basket methodology and benchmark series, not live fund returns or a filed portfolio track record. Performance as of Oct 11, 2026.

Total Return

+7.4%

↓ SPY +17.4%

Ann. Return

+7.5%

↓ SPY +17.7%

Ann. Vol

26.1%

↑ SPY 12.7%

Sharpe

0.29

↓ SPY 1.39

Max Drawdown

-21.0%

↓ SPY -9.1%

Alpha vs SPY

-10.5%

↓ hit rate 46.0%

Performance as of Oct 11, 2026.

Rolling Performance vs Benchmark

Portfolio Holdings

Holding
Weight
Country
Exchange
Sector
Industry
Mkt Cap
Price
1Y
1Y Trend
BA
BAThe Boeing Company
20.0%
—
—
—
—
—
—
—
HWM
HWMHowmet Aerospace Inc.
20.0%
—
—
—
—
—
—
—
LHX
LHXL3Harris Technologies, Inc.
15.5%
—
—
—
—
—
—
—
RKLB
RKLBRocket Lab USA, Inc.
9.3%
—
—
—
—
—
—
—
TDY
TDYTeledyne Technologies Incorporated
7.7%
—
—
—
—
—
—
—
ESLT
ESLTElbit Systems Ltd.
6.5%
—
—
—
—
—
—
—
CW
CWCurtiss-Wright Corporation
6.0%
—
—
—
—
—
—
—
WWD
WWDWoodward, Inc.
4.3%
—
—
—
—
—
—
—
TXT
TXTTextron Inc.
4.3%
—
—
—
—
—
—
—
HII
HIIHuntington Ingalls Industries, Inc.
3.2%
—
—
—
—
—
—
—
MOG-A
MOG-AMoog Inc.
1.9%
—
—
—
—
—
—
—
MRCY
MRCYMercury Systems, Inc.
1.3%
—
—
—
—
—
—
—

SSR performance series fallback

The table below is the server-rendered reference series behind the interactive chart. Values show the wealth index level from a 1.00 starting value, not a second 1Y return figure. Series as of Oct 11, 2026.

DateModel basket wealth indexSPY
Oct 14, 20251.0000x1.0000x
Oct 15, 20250.9910x1.0044x
Oct 16, 20250.9780x0.9976x
Oct 17, 20250.9732x1.0033x
Oct 20, 20250.9915x1.0137x
Oct 21, 20250.9947x1.0137x
Oct 22, 20250.9702x1.0084x
Oct 23, 20250.9928x1.0144x
Oct 24, 20250.9997x1.0227x
Oct 27, 20251.0038x1.0347x
Oct 28, 20250.9967x1.0375x
Oct 29, 20250.9946x1.0380x
Oct 30, 20250.9785x1.0266x
Oct 31, 20250.9850x1.0299x
Nov 3, 20250.9858x1.0319x
Nov 4, 20250.9671x1.0196x
Nov 5, 20250.9647x1.0232x
Nov 6, 20250.9489x1.0122x
Nov 7, 20250.9578x1.0132x
Nov 10, 20250.9710x1.0290x
Nov 11, 20250.9695x1.0314x
Nov 12, 20250.9642x1.0319x
Nov 13, 20250.9356x1.0148x
Nov 14, 20250.9379x1.0146x
Nov 17, 20250.9285x1.0052x
Nov 18, 20250.9245x0.9968x
Nov 19, 20250.9204x1.0006x
Nov 20, 20250.8964x0.9854x
Nov 21, 20250.9002x0.9952x
Nov 24, 20250.9073x1.0098x
Nov 25, 20250.9220x1.0193x
Nov 26, 20250.9279x1.0264x
Nov 28, 20250.9325x1.0320x
Dec 1, 20250.9110x1.0272x
Dec 2, 20250.9336x1.0291x
Dec 3, 20250.9398x1.0327x
Dec 4, 20250.9571x1.0335x
Dec 5, 20250.9503x1.0354x
Dec 8, 20250.9634x1.0323x
Dec 9, 20250.9557x1.0314x
Dec 10, 20250.9713x1.0383x
Dec 11, 20250.9954x1.0407x
Dec 12, 20250.9937x1.0295x
Dec 15, 20250.9857x1.0279x
Dec 16, 20250.9795x1.0251x
Dec 17, 20250.9692x1.0138x
Dec 18, 20250.9926x1.0215x
Dec 19, 20251.0306x1.0277x
Dec 22, 20251.0614x1.0341x
Dec 23, 20251.0655x1.0389x
Dec 24, 20251.0699x1.0425x
Dec 26, 20251.0548x1.0424x
Dec 29, 20251.0510x1.0387x
Dec 30, 20251.0491x1.0374x
Dec 31, 20251.0395x1.0297x
Jan 2, 20261.0797x1.0316x
Jan 5, 20261.0999x1.0385x
Jan 6, 20261.1214x1.0447x
Jan 7, 20261.1094x1.0413x
Jan 8, 20261.1243x1.0412x
Jan 9, 20261.1552x1.0481x
Jan 12, 20261.1772x1.0497x
Jan 13, 20261.1827x1.0476x
Jan 14, 20261.1941x1.0425x
Jan 15, 20261.2068x1.0453x
Jan 16, 20261.2214x1.0444x
Jan 20, 20261.1974x1.0232x
Jan 21, 20261.2201x1.0350x
Jan 22, 20261.2159x1.0404x
Jan 23, 20261.2109x1.0408x
Jan 26, 20261.1952x1.0461x
Jan 27, 20261.2093x1.0502x
Jan 28, 20261.1996x1.0501x
Jan 30, 20261.1646x1.0449x
Feb 2, 20261.1547x1.0501x
Feb 3, 20261.1952x1.0412x
Feb 4, 20261.1601x1.0362x
Feb 5, 20261.1507x1.0232x
Feb 6, 20261.1963x1.0429x
Feb 9, 20261.2105x1.0479x
Feb 10, 20261.1987x1.0451x
Feb 11, 20261.1893x1.0449x
Feb 12, 20261.2053x1.0288x
Feb 13, 20261.2243x1.0295x
Feb 17, 20261.2354x1.0311x
Feb 18, 20261.2441x1.0363x
Feb 19, 20261.2541x1.0336x
Feb 20, 20261.2501x1.0411x
Feb 23, 20261.2462x1.0304x
Feb 24, 20261.2592x1.0379x
Feb 25, 20261.2421x1.0467x
Feb 26, 20261.2560x1.0409x
Feb 27, 20261.2558x1.0359x
Mar 2, 20261.2866x1.0365x
Mar 3, 20261.2584x1.0273x
Mar 4, 20261.2733x1.0346x
Mar 5, 20261.2397x1.0288x
Mar 6, 20261.2531x1.0153x
Mar 9, 20261.2577x1.0242x
Mar 10, 20261.2353x1.0226x
Mar 11, 20261.2344x1.0213x
Mar 12, 20261.1972x1.0058x
Mar 13, 20261.1919x1.0001x
Mar 16, 20261.2155x1.0103x
Mar 17, 20261.2373x1.0129x
Mar 18, 20261.2144x0.9988x
Mar 19, 20261.1994x0.9963x
Mar 20, 20261.1658x0.9794x
Mar 23, 20261.1744x0.9897x
Mar 24, 20261.1785x0.9863x
Mar 25, 20261.1992x0.9918x
Mar 26, 20261.1554x0.9741x
Mar 27, 20261.1295x0.9575x
Mar 30, 20261.1024x0.9543x
Mar 31, 20261.1525x0.9820x
Apr 1, 20261.1907x0.9894x
Apr 2, 20261.1884x0.9903x
Apr 6, 20261.2065x0.9950x
Apr 7, 20261.1971x0.9955x
Apr 8, 20261.2437x1.0208x
Apr 9, 20261.2425x1.0267x
Apr 10, 20261.2352x1.0260x
Apr 13, 20261.2569x1.0360x
Apr 14, 20261.2612x1.0487x
Apr 15, 20261.2527x1.0569x
Apr 16, 20261.2474x1.0595x
Apr 17, 20261.2675x1.0723x
Apr 20, 20261.2758x1.0702x
Apr 21, 20261.2450x1.0632x
Apr 22, 20261.2474x1.0740x
Apr 23, 20261.2491x1.0698x
Apr 24, 20261.2225x1.0781x
Apr 27, 20261.2267x1.0799x
Apr 28, 20261.2201x1.0747x
Apr 29, 20261.2007x1.0745x
Apr 30, 20261.2315x1.0852x
May 1, 20261.2132x1.0882x
May 4, 20261.2068x1.0842x
May 5, 20261.2058x1.0929x
May 6, 20261.2394x1.1081x
May 7, 20261.2362x1.1047x
May 8, 20261.2772x1.1138x
May 11, 20261.3000x1.1164x
May 12, 20261.3021x1.1147x
May 13, 20261.3139x1.1209x
May 14, 20261.3119x1.1298x
May 15, 20261.2628x1.1162x
May 18, 20261.2738x1.1154x
May 19, 20261.2539x1.1080x
May 20, 20261.2842x1.1193x
May 21, 20261.2685x1.1215x
May 22, 20261.2823x1.1260x
May 26, 20261.3114x1.1334x
May 27, 20261.3099x1.1332x
May 28, 20261.3323x1.1395x
May 29, 20261.3246x1.1423x
Jun 1, 20261.2817x1.1454x
Jun 2, 20261.2717x1.1470x
Jun 3, 20261.2492x1.1389x
Jun 4, 20261.2724x1.1432x
Jun 5, 20261.2550x1.1137x
Jun 8, 20261.2520x1.1163x
Jun 9, 20261.2681x1.1130x
Jun 10, 20261.2364x1.0954x
Jun 11, 20261.3089x1.1141x
Jun 12, 20261.2832x1.1201x
Jun 15, 20261.3056x1.1398x
Jun 16, 20261.3132x1.1330x
Jun 17, 20261.3232x1.1189x
Jun 18, 20261.2938x1.1276x
Jun 22, 20261.2757x1.1241x
Jun 23, 20261.2634x1.1077x
Jun 24, 20261.2488x1.1072x
Jun 25, 20261.2418x1.1088x
Jun 26, 20261.2421x1.1008x
Jun 29, 20261.2574x1.1189x
Jun 30, 20261.2771x1.1277x
Jul 1, 20261.2761x1.1261x
Jul 2, 20261.3009x1.1247x
Jul 6, 20261.3145x1.1345x
Jul 7, 20261.2779x1.1291x
Jul 8, 20261.2622x1.1256x
Jul 9, 20261.2562x1.1351x
Jul 10, 20261.2497x1.1400x
Jul 13, 20261.2254x1.1313x
Jul 14, 20261.2372x1.1353x
Jul 15, 20261.2347x1.1398x
Jul 16, 20261.2038x1.1336x
Jul 17, 20261.2043x1.1224x
Jul 20, 20261.1944x1.1206x
Jul 21, 20261.2084x1.1299x
Jul 22, 20261.2253x1.1286x
Jul 23, 20261.2499x1.1147x
Jul 24, 20261.2461x1.1158x
Jul 27, 20261.2540x1.1161x
Jul 28, 20261.2550x1.1187x
Jul 29, 20261.1961x1.1015x
Jul 30, 20261.2166x1.1200x
Jul 31, 20261.2226x1.1281x
Aug 3, 20261.2654x1.1441x
Aug 4, 20261.2928x1.1647x
Aug 5, 20261.2984x1.1624x
Aug 6, 20261.2878x1.1606x
Aug 7, 20261.2913x1.1677x
Aug 10, 20261.2882x1.1673x
Aug 11, 20261.2767x1.1636x
Aug 12, 20261.2850x1.1665x
Aug 13, 20261.2748x1.1746x
Aug 14, 20261.2907x1.1723x
Aug 17, 20261.2755x1.1668x
Aug 18, 20261.2688x1.1589x
Aug 19, 20261.2396x1.1613x
Aug 20, 20261.2002x1.1516x
Aug 21, 20261.1918x1.1563x
Aug 24, 20261.1628x1.1529x
Aug 25, 20261.1602x1.1566x
Aug 26, 20261.1707x1.1568x
Aug 27, 20261.1650x1.1644x
Aug 28, 20261.1538x1.1618x
Aug 31, 20261.1295x1.1583x
Sep 1, 20261.1304x1.1503x
Sep 2, 20261.1282x1.1554x
Sep 3, 20261.1407x1.1675x
Sep 4, 20261.1383x1.1630x
Sep 8, 20261.1145x1.1566x
Sep 9, 20261.0999x1.1513x
Sep 10, 20261.0899x1.1444x
Sep 11, 20261.1000x1.1541x
Sep 14, 20261.0948x1.1490x
Sep 15, 20261.0962x1.1437x
Sep 16, 20261.0938x1.1387x
Sep 17, 20261.0935x1.1516x
Sep 18, 20261.0909x1.1502x
Sep 21, 20261.1026x1.1680x
Sep 22, 20261.0911x1.1678x
Sep 23, 20261.0938x1.1594x
Sep 24, 20261.0928x1.1585x
Sep 25, 20261.0975x1.1648x
Sep 28, 20261.0703x1.1561x
Sep 29, 20261.0732x1.1540x
Sep 30, 20261.0659x1.1516x
Oct 1, 20261.0830x1.1537x
Oct 2, 20261.0905x1.1622x
Oct 5, 20261.0860x1.1700x
Oct 6, 20261.0874x1.1765x
Oct 7, 20261.0558x1.1736x
Oct 8, 20261.0524x1.1687x
Oct 9, 20261.0609x1.1757x

Themes and category

American RenaissanceIndustrial RenaissanceQuality

Methodology and caveats

QuantLink fetches this idea from the live FastAPI ideas endpoints and renders the returned title, thesis, holdings, themes, benchmark, and tearsheet fields directly. Missing fields are left unavailable rather than fabricated.

Holdings are a curated model basket. They are not 13F filings, not insider filings, not adviser holdings, and not a claim that any person or fund owns the basket.

Backtested performance depends on the returned basket weights, benchmark, rebalancing assumptions, available price history, and calculation choices in the tearsheet endpoint. Backtests can differ materially from live results and do not include every cost, tax, capacity, liquidity, or execution constraint an investor may face.

Equal-weight and target-weight baskets can drift between rebalance points. Rebalancing can increase turnover, and concentrated thematic baskets can have higher drawdowns than a broad market benchmark.

Frequently asked questions

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