These 'Last Supper' Survivors Rule the Market

The Pentagon's dining room felt more like a trap than a gesture of hospitality... 

It was the summer of 1993. Secretary of Defense Les Aspin had summoned the leaders of America's largest defense contractors for a private dinner.

The Cold War had ended two years earlier, leaving America's defense establishment without its old adversary... and unsure of what came next.

Executives expected another night of policy talk and polite networking – the kind of ritual that ended with some reassuring words about future contracts.

But this night would earn a far darker nickname...

The Last Supper.

Aspin didn't mince words... The Pentagon's budget was about to take a nosedive...

Factories were sitting half-empty. The military didn't need five fighter-jet makers, three bomber builders, and half a dozen shipyards all vying for work.

Deputy Secretary of Defense William Perry – who would soon succeed Aspin – made the message even sharper. 

In a briefing room, he showed the CEOs a series of charts projecting the future of Pentagon spending. The lines dropped off a cliff.

"We expect defense companies to go out of business," he said. "We will stand by and watch it happen."

The room was stunned. Executives never expected to hear that the government they depended on was ready to let them die.

Norm Augustine, the hard-nosed CEO of Martin Marietta, left the room with a mission...

Augustine was determined to ensure his business wouldn't be one of the casualties. Northrop's Kent Kresa, a calm engineer with a reputation for quiet toughness, saw the same writing on the wall.

The mergers started almost immediately.

Martin Marietta had already bought General Electric's aerospace unit a few months before the Last Supper. It then merged with Lockheed in 1994.

Boeing swallowed McDonnell Douglas. Raytheon grabbed Hughes Aircraft.

And in one of the most pivotal moves, Northrop and Grumman – two proud companies with deep roots in aviation – came together.

Within just a few years, more than 50 significant defense firms collapsed into a much smaller stronghold...

Today, they're known as the "Big Five"... Lockheed Martin (LMT), Boeing (BA), RTX (RTX), General Dynamics (GD), and Northrop Grumman (NOC).

Each "prime contractor" emerged with near-total dominance in specific military domains.

Lockheed Martin became the king of fighters. Raytheon ruled missiles. Boeing straddled commercial and military aviation.

And Northrop Grumman took space, stealth, and strategic systems – the invisible backbone of American power.

By the late 1990s, the Big Five had become indispensable. When the Pentagon needed an aircraft carrier radar, a stealth bomber, or a missile-warning satellite, there was often only one company that could deliver.

Their leverage has only grown over time. Three decades later, Washington still talks about diversifying its suppliers and nurturing smaller firms.

When the U.S. faces a critical mission, the call goes straight to the same titans forged at that table in 1993... 

And in today's unstable geopolitical environment, these businesses are more critical than ever.

For the defense industry, 2025 started off as the "year of uncertainty." Conflicting signals from Washington left investors on edge.

On one hand, President Donald Trump's administration hinted at new military initiatives. On the other, calls for cost-cutting were gaining traction.

But after months of uncertainty, the U.S. government made its stance on defense clear. Our country will invest in new technologies to keep up with an evolving world.

Despite all those headlines about cutting the U.S. defense budget, the Trump administration increased the defense budget by 13%... crossing the $1 trillion threshold for the first time ever.

And for investors, that presents a clear opportunity. As global tensions climb, the defense industry's role is set to grow... and grow... and grow.

Regards,

Joel Litman
October 27, 2025