At TrueStar Advisors, we have a project that is ongoing. We are doing an extensive amount of research into aviation and avionics in particular. We are studying drones and manned airplanes and all of the various components that comprise the military procurement, use, and development, as well as all of the support systems that go into airborne weapons systems.
Something we have at TrueStar Advisors for clients to invest in is our military procurement investment silo which is based upon a methodical process. Our approach begins with the thirty companies with the largest contracts with the Department of Defense during the prior year. This approach is not based on the capitalization of the companies. We acquire for our client's shares in each company based on an equal weight basis. We begin with thirty companies, and each would have a portfolio value equal to 1/30th. For example, we start the year with thirty companies, and at present, we are at twenty-nine, and we anticipate a decrease to twenty-eight because of another merger that is in process.
We have found it fascinating that there has been a dramatic and fundamental shift in weapons technology. Take the drone for example. When I say drone, any number of things will come to mind. You may think of a toy drone. One that is used by individuals two take pictures of their house and other things. You may be thinking of military drones that are used in the Middle East and have been used extensively during the Obama administration. You may be thinking of law enforcement drones being used over cities to surveille criminals and terrorists. I do not know what you are thinking, but I do know drones are here to stay.
Drones are changing the way we design planes, train pilots, and acquire pilots. For example, the F-35 is the most complicated planes ever designed and the cost overruns are astronomical. Our military cannot afford to buy all the aircraft that they want, and if they did, the purchase would single-handily, and quite literally bankrupt the nation. We are between a rock and a hard place when it comes to the F-35, and one of the biggest proponents for the plane was the late Senator John McCain. McCain was absolutely dead set on making sure that his political contributors from the military industrial complex were taken care of and this plane did just that. I am not going say good riddance, but I will say as a result of his death, the door now opens for legitimate rational thinking when it comes to military airplane procurement. You do not have to dislike or like John McCain, but anyone who truly knows how we do business knows that we are blunt, factual, and deal with reality without emotional baggage. As a result, changes are now coming.
We have been explicitly following the development of light attack aircraft. Light attack aircraft is something that the military investigated for a few years and is now beginning to thoroughly vet several commercial manufacturers for retro-fit capabilities. What is a light attack aircraft and why would the military want less sophisticated aircraft when everything is getting more complicated?
There is a lot going on that is we will not go into in this blog; however, the fact that the Russians are in the process of continuing their rapid advancement of warfare technology, far beyond our capabilities, and their apparent ability to manipulate and disable our GPS system, we believe has a lot to do with the desire to “dumb-down” and make systems less vulnerable. There is no doubt that there are grave concerns within the military that our posturing during the two administrations before Trump, have exposed our capabilities for an in-depth assessment by enemies of the state and our long-term abilities are more depleted and spent. The reactivation of old-school communication techniques for our Navy has a lot to do with the satellite vulnerability of the United States.
Sometimes one must accept and realize that just because you can does not mean you should, and as a result, one of the things we know for sure is that, when change occurs, there is opportunity.
We are digging deeply and are having productive discussions about how our military procurement investment silo will perform in the future. As a forecasting organization, we look at the quantitative as well as the qualitative analysis by others and then make our assessments based on non-emotional evaluations.
There are always opportunities in the military procurement, homeland-defense, and law enforcement industries because one thing is always going to occur, death and destruction at the hands of those who are evil and stupid.