Key Takeaways
- • GE Aerospace (NYSE: GE) ranked first among the most widely held defense names with 113 hedge fund holders in Q2, and raised full-year profit guidance for the second time in 2026 after Q3 adjusted revenue of $13.3 billion and a 36% jump in adjusted EPS to $2.25.
- • RTX Corporation (NYSE: RTX) booked $81 billion of new contracts in Q3 alone, including a $22.9 billion Tomahawk cruise missile award and a $20.7 billion AMRAAM deal, lifting total backlog to a record $340 billion.
- • Lockheed Martin (NYSE: LMT) posted Q3 net sales of $20.7 billion, up 11% year over year, and EPS of $7.97 versus consensus of $7.43, alongside a Pentagon agreement worth nearly $78 billion for at least 850 F-35 jets.
- • The NYSE Arca Defense Index gained only 2.76% year to date through October 29, against 12.57% for the S&P 500, as budget uncertainty and stretched valuations weighed on the sector.
- • Bernstein's Douglas Harned advised waiting for the November 3 midterm elections before acting on dips, and projected the 2027 defense investment budget would rise more than 10%.
Summary
Defense stocks have lagged the broader market in 2026. The NYSE Arca Defense Index rose 2.76% year to date through October 29, while the S&P 500 advanced 12.57%. Analysts cite budget uncertainty, evolving battlefield technologies, and valuations that remain elevated after years of conflict-driven demand. Despite this, hedge funds tracked by Insider Monkey's Q2 2026 database continue to hold significant positions in the five most widely held defense names on U.S. exchanges.
Bernstein's Douglas Harned urged investors on September 23 to wait for the November 3 midterm elections before acting on any dip, describing the vote as a potential clearing event for federal budget visibility. He projected the 2027 defense investment budget would grow more than 10% and rejected concerns that a Democratic outcome would pressure military spending, citing historical trends. Brand Clark of The Clark Group Asset Management, speaking on the Schwab Network, argued that defense is a strategic portfolio holding rather than a tactical trade, noting that a resolution to the Iran conflict would not meaningfully reduce outlays given the need to replenish inventories and build stockpiles against threats from China and North Korea.
GE Aerospace led the ranking with 113 hedge fund holders in Q2, supported by an installed base of roughly 30,000 military and 50,000 commercial aircraft engines. The company raised full-year profit guidance for the second time in 2026 after reporting Q3 adjusted revenue of $13.3 billion. RTX Corporation ranked second with 92 holders and secured $81 billion in new Q3 contracts, with third-quarter revenue rising 11% to $25 billion, beating estimates of $24.08 billion, and adjusted EPS of $2.26, up 33% and above the $1.78 consensus.
Lockheed Martin drew 75 holders in Q2, down from 83 in Q1, but its Q3 results marked a rebound after a difficult start to 2026. Net sales reached $20.7 billion, and EPS of $7.97 beat the $7.43 consensus. The same day, Lockheed announced a 10-year Pentagon agreement worth nearly $78 billion covering at least 850 F-35 Lightning II jets. Boeing (NYSE: BA) held 90 hedge fund holders, though its shares have fallen 6% since October 27 after a net loss of 34 cents per share against an expected loss of 21 cents. Its defense unit revenue rose 15% to $7.9 billion, operating margin widened to 6.2% from 1.7%, and defense backlog reached a record $101 billion. Total company backlog hit a record $745 billion, and a Navy F/A-XX contract represents a future catalyst not yet reflected in those figures.
TransDigm Group (NYSE: TDG) ranked fourth with 83 holders. Its third-quarter EBITDA As Defined margin was 52.8%. Soroban Capital Partners raised its stake by 21% during the quarter, making it the largest shareholder with holdings of about $1.19 billion. TransDigm's Q3 net sales rose 23% to $2.74 billion, adjusted EPS grew 13% to $10.87, and EBITDA As Defined expanded 19% to roughly $1.45 billion.
Bernstein's Douglas Harned urged investors on September 23 to wait for the November 3 midterm elections before acting on any dip, describing the vote as a potential clearing event for federal budget visibility. He projected the 2027 defense investment budget would grow more than 10% and rejected concerns that a Democratic outcome would pressure military spending, citing historical trends. Brand Clark of The Clark Group Asset Management, speaking on the Schwab Network, argued that defense is a strategic portfolio holding rather than a tactical trade, noting that a resolution to the Iran conflict would not meaningfully reduce outlays given the need to replenish inventories and build stockpiles against threats from China and North Korea.
GE Aerospace led the ranking with 113 hedge fund holders in Q2, supported by an installed base of roughly 30,000 military and 50,000 commercial aircraft engines. The company raised full-year profit guidance for the second time in 2026 after reporting Q3 adjusted revenue of $13.3 billion. RTX Corporation ranked second with 92 holders and secured $81 billion in new Q3 contracts, with third-quarter revenue rising 11% to $25 billion, beating estimates of $24.08 billion, and adjusted EPS of $2.26, up 33% and above the $1.78 consensus.
Lockheed Martin drew 75 holders in Q2, down from 83 in Q1, but its Q3 results marked a rebound after a difficult start to 2026. Net sales reached $20.7 billion, and EPS of $7.97 beat the $7.43 consensus. The same day, Lockheed announced a 10-year Pentagon agreement worth nearly $78 billion covering at least 850 F-35 Lightning II jets. Boeing (NYSE: BA) held 90 hedge fund holders, though its shares have fallen 6% since October 27 after a net loss of 34 cents per share against an expected loss of 21 cents. Its defense unit revenue rose 15% to $7.9 billion, operating margin widened to 6.2% from 1.7%, and defense backlog reached a record $101 billion. Total company backlog hit a record $745 billion, and a Navy F/A-XX contract represents a future catalyst not yet reflected in those figures.
TransDigm Group (NYSE: TDG) ranked fourth with 83 holders. Its third-quarter EBITDA As Defined margin was 52.8%. Soroban Capital Partners raised its stake by 21% during the quarter, making it the largest shareholder with holdings of about $1.19 billion. TransDigm's Q3 net sales rose 23% to $2.74 billion, adjusted EPS grew 13% to $10.87, and EBITDA As Defined expanded 19% to roughly $1.45 billion.
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