L3Harris Technologies Inc

L3Harris Technologies, Inc. (LHX), a defense contractor and IT services provider, rounded out the list of top detractors, with shares trading lower amid a broad defense sector derating. After several quarters of strong performance, the sector pulled back on concerns the proposed $1.5 trillion defense budget would not pass Congress. Though LHX has meaningful base-budget exposure, cutting or materially reducing the reconciliation package would weigh on projects expected to benefit the company, such as Golden Dome. That said, the company continues to see strong momentum across each of its segments and remains well-positioned for the Department of War’s long-term priorities. Our thesis for LHX remains intact.

We believe this represents a shift from episodic spending cycles toward a more durable, multi-year rearmament phase. BAE Systems, L3Harris and RTX illustrate this dynamic. Their exposure to growing areas such as propulsion, tracking and sensing technologies is expanding addressable demand. And capacity constraints in areas such as solid rocket motors can create both volume growth and margin expansion as production capacity is increased.

L3Harris delivered solid performance amid sustained global defense spending trends. The company is well-positioned to benefit from ongoing investments in defense, which are expected to remain strong. This positions L3Harris as a key player in the industrials sector, particularly as the demand for defense capabilities continues to grow. The portfolio's exposure to L3Harris reflects a belief in its competitive advantages and long-term growth potential in a favorable market environment.

Given our large holdings in defense, Dividend Strategy has benefited strongly over the last few years. At current prices, and given increasingly statist commentary from the federal government, we believe better opportunities exist elsewhere. We exited Northrop Grumman and trimmed L3Harris and RTX.

L3Harris Technologies performed well in an environment of heightened geopolitical tensions. The company has been a recent addition to our portfolio, and we believe it is well-positioned to benefit from ongoing global security concerns. Our investment thesis is supported by the company's strong fundamentals and its ability to navigate the current geopolitical landscape effectively.

The manager discussed L3Harris in the context of portfolio adjustments, noting that they trimmed positions based on price strength. However, there was no explicit bullish or bearish argument made regarding the company's future performance or valuation.

During the quarter we initiated a position in L3Harris, a defense company which had sold off on DOGE-related concerns. With armed conflict breaking out all over, robust defense spending seems like one of today’s few safe bets. L3Harris possesses a robust balance sheet and a strong outlook, and it offered an attractive entry point at a steep discount to the broader market in terms of free cash flow.

L3Harris is mentioned in the context of Solitron's bookings, which included a large two-year order for HIMARS components from L3Harris. However, there is no explicit directional argument made about L3Harris itself in the provided passages.

L3Harris is mentioned in the context of Solitron's business, specifically regarding a large two-year order for HIMARS components. However, there is no explicit directional argument made about L3Harris itself in the provided passages.

Firms like Palantir or L3Harris could continue to outpace traditional defense players as software and intelligence become the new weapons platforms. The very definition of defense is expanding, with robotics, AI, cybersecurity, and data infrastructure now central to national security. This shift is prompting a fundamental reassessment in most countries’ defense postures, leading to multi-decade modernization efforts and rising defense budgets. The trends underpinning a supercycle in capital spending have large investment implications, positioning L3Harris favorably in this evolving landscape.