Last month we wrote that the agreement to reopen the Strait of Hormuz might finally set the stage for an end to the war. It held for roughly three weeks. In early July the IRGC struck commercial shipping, the United States answered with strikes on some 140 targets across Iran, and by July 14 the naval blockade of Iranian ports was back in place. Trump is now leaning toward expanding military operations.
The strategic read: the strait has become Tehran’s most valuable weapon, arguably a higher priority now than its nuclear program. Washington is settling in for a longer confrontation.
For the defense industrial base, the demand shock is no longer an event; it is a condition. The response this month moved on three fronts, each running directly through our portfolio.
Munitions Production Moves to a Wartime Footing
President Trump invoked Cold War-era Defense Production Act authorities to force munitions output higher and summoned the country’s manufacturers to Washington as stockpile concerns mounted. And the $87.6 billion war supplemental carries $21 billion for munitions, the largest single line in the request. The administration’s total munitions ask this year now stands at $97.3 billion.
Despite the strength of the demand signals, industry is struggling to keep pace, facing an array of challenges from procurement to component shortages.
The DPA should provide some relief. Mike Cadenazzi, Assistant Secretary of Defense for Industrial Base Policy, said this will enable the Pentagon to have “discussions with different companies about different issues, such as ways to more quickly certify new solid rocket motor manufacturers.” Great news for portfolio company Firehawk.
Defense Tech Is Delivering While Flagship Programs Slip
The government’s own auditors reported further delays to America’s first hypersonic weapon program this month. Set that against what actually happened in the war: sea drones struck Iranian infrastructure. Last month we flagged a Saronic vessel for a combat rescue; this month Saronic went on offense. Neros, a startup mass-producing cheap attack drones, won a $500 million Army production contract.
The pattern is hard to miss. Marquee prime-led programs keep slipping right, while venture-backed manufacturers are being fielded in combat and handed production-scale contracts. Castelion sits squarely on the right side of that divide: as the legacy hypersonic effort falls further behind, Blackbeard’s path now runs to more than 12,000 missiles over five years.
Allies Have Stopped Waiting
NATO is fixing its money problem, but the harder task is converting cash into munitions, and the alliance knows it. Ukraine is no longer waiting in the interceptor queue: it is standing up domestic Patriot missile production with local manufacturer Fire Point. And when allies build, they increasingly build with American defense tech: Anduril is in talks to take over Nissan’s Oppama plant to produce drones for Japan, weeks after standing up its first European production line in Poland.
Allied rearmament used to mean foreign military sales. It increasingly means co-production with the new American defense base, creating a durable, compounding demand channel for the companies we back.
A war that restarted, wartime authorities invoked, new entrants fielded while legacy programs slip, and allies industrializing on American designs: every one of these threads pulls demand toward the fund’s portfolio. The articles below track each in turn.
Further Reading
Trump Invokes Cold War-Era Law to Boost Munitions Production
U.S. Defense Groups to Meet Donald Trump as Missile Production Struggles
Ukraine Wants to Make Its Own Antimissile System, Not Just Patriots
World Powers Are in $2 Trillion Race for Control of Warfare’s Future
There’s a New Way of War, but Is It Evolution or Revolution?
In the U.S., the Ties Between Industry and Defense Go Back to the Country’s Founding