Pete Hegseth Preparing 'Game-Changing' Military Acquisition Plan
The U.S. Secretary of War will be outlining an economically critical new process for the military.
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On Friday, I got to discuss production for security (ProSec) electricity and more, on Bloomberg TV (the Academy Securities segment starts at the 3:50 mark).
As you know, we have been advocating buying companies that fit into the themes of:
- Anything connected to production for security, though they must be U.S. focused. On the commodity side of things, it's overweight refining/processing over extraction. Electricity production is high on our list (favoring nuclear names – which are already doing well — and solar – which is languishing so far). Look for “national champions” – like the Intel deal.
- Whatever companies and industries the government is focused on
There is news that we expect on procurement that should be beneficial to these strategies.
Streamlining Procurement
On November 7, War Secretary Hegseth is expected to outline a new Military Acquisition Process. This can be “game changing.”
From annual budgets set years in advance to ongoing spending on equipment or systems that either didn’t deliver what was expected or aren’t necessary to today’s strategies (or versus current threats). DARPA has done an amazing job of developing new technologies, but the military has had only limited success in scaling up those technologies quickly.
The opportunities could be changing rapidly, given what we are seeing in drones in Russia and Ukraine and hypersonics in Russia and China, and the change cannot happen fast enough. Even on the more “mundane” side of things — like relatively simple artillery shells — we have exposed that we are not well equipped to produce as many as we might need.
Spending on space hasn’t received the attention it deserves on the defense side of things and that is likely to change. As one of the biggest “wallets” in the entire world, a shift in spending patterns here creates immense opportunities.
While not quite “procurement,” just look at what the army has done in terms of opening up the ability to build nuclear facilities on their bases. Look at what it has done already to secure domestic resources.
Ship building (from surface drones, to larger attack ships) and the ability to repair and maintain our existing fleet will be its own category of growth.
While we merely scratched the surface on the military side of this, look for procurement to change across the government. Medicaid seems like another obvious candidate to be examined by this administration.
We may not be able to overstate the importance of this change in mentality, and it has the potential to be so massive. Also, think back to ProSec — what are the odds that entities that the government has invested in (on behalf of the taxpayers) don’t have an edge? Again, I'm not arguing necessarily how right or wrong that is, but it seems like a logical conclusion.
I hope my excitement with these developments comes through in the writing (just as much as my “dismay” after the Liberation Day tariffs came through – which were backed away from rapidly).
