Alger Mid Cap Focus Fund on Karman Holdings Inc.
Thesis
Alger views Karman as a differentiated supplier of structural and propulsion components used across launch vehicles, missiles, spacecraft, hypersonics and unmanned aircraft. The fund believes its engineering capabilities, visibility from long-term defense contracts and exposure to expanding government and commercial space budgets support a longer-term opportunity. Near-term performance was hurt by an earnings shortfall, auditor and internal-control concerns, a shareholder secondary offering and weaker space-sector sentiment.
“we believe Karman’s differentiated engineering capabilities, long-term defense contract visibility, and exposure to expanding government and commercial space budgets support its longer-term opportunity.”
Key risks
- Earnings shortfall and internal-control concerns
- Secondary offering by existing shareholders
- Weak space-sector sentiment after a Blue Origin rocket incident