Nomura Value Fund, a series of Delaware Group Equity Funds II on Northrop Grumman Corporation

Northrop Grumman weakened after a strong run as investors took profits across defense stocks and focused on free-cash-flow pressure from elevated capital spending. The fund believes that spending is productive because it primarily supports the company’s role in the US nuclear triad program, a key Department of Defense priority. Management also reported an expanding order backlog, reinforcing the fund’s view that the long-term revenue and cash-flow outlook remains strong. The investment case therefore rests on accepting near-term cash-flow pressure in exchange for stronger future program economics and growth.