Lockheed Martin Enhances Its Portfolio with Saildrone Investment
The company will invest $50 million in the closely held unmanned surface vehicle (USV) maker
Industrials: Aerospace & Defense
Lockheed Martin (LMT $486) has been—and remains—one of our favorite holdings within the Penn Global Leaders Club. An undervalued gem, the global aerospace, defense, and security juggernaut remains on the cutting edge of technology. Take, for instance, the company’s most recent investment into Saildrone.
Founded in 2012 by English/Australian engineer Richard Jenkins, Saildrone traces its roots back to the late 1990s with the development of an innovative, wind-powered land vehicle called Greenbird. Jenkins spent a decade refining the unique rigid-sail design of his Greenbird, and in 2009 he achieved his goal of breaking the world land speed record for a non-motorized vehicle. On a dry lakebed in Nevada, he piloted his craft to a speed of 126.2 mph.
After achieving this feat, Jenkins turned his attention to seafaring, applying his patented sustainable-wing technology to an uncrewed surface vehicle (USV). The first Saildrone USV sailed from San Francisco to Hawaii in 2013, covering 2,200 nautical miles in 33 days using only wind power to propel it. Viewing defense as its biggest use case, the company tried to sell the US Navy on the potential military uses for such a vehicle back in 2014, but the branch was unconvinced. In subsequent years, the company continued to improve upon its design, providing remarkable swaths of data to various government and private organizations around the world.
About six years ago, the US Navy underwent a shift in its strategic thinking, suddenly embracing the idea of a hybrid fleet of traditional warships combined with USVs of various sizes. Saildrone was there, and both the Navy and the US Coast Guard now use a number of different variants, from the 7-meter Explorer, to the 10-meter Voyager, to the 22-meter Surveyor.
Now, this forward-looking company is pushing to the next frontier: firepower. With Saildrones capable of operating in even the harshest of ocean environments, able to remain at sea for up to a year virtually maintenance free, the company began conceptualizing the addition of a missile system to augment its surveillance capabilities with actual deterrence. Lockheed Martin became the obvious partner for the project.
With plans to invest $50 million in Saildrone, Lockheed has the goal of equipping the company’s largest craft with advanced Vertical Launch System (VLS) launchers such as the MK70. The MK70 Payload Delivery System (PDS) is a modular missile launch system designed to provide long-range strike and air defense capabilities to non-traditional ships and ground installations. Construction will begin immediately at Austal USA, a prime defense contractor headquartered in Mobile, Alabama, with live fire demonstrations targeted for 2026.
A Saildrone Voyager USV and a Lockheed Martin Missile Launcher (Image courtesy of Saildrone)
Lockheed Martin, under the leadership of former United States Air Force pilot James Taiclet, is—in our opinion—the world’s benchmark aerospace and defense firm. Despite the critical part it plays in America’s defense posture, to include a major role in the new Golden Dome Missile Defense System project, investors have largely been ignoring this $100 billion industrial giant. We believe that is a mistake. LMT is a long-term holding within the Penn Global Leaders Club, and we have a current fair value estimate of $600 on the shares.
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