Is LightPath (LPTH) a Hidden Winner in Missile Defense and Space?

Is LightPath (LPTH) a Hidden Winner in Missile Defense and Space?

Thu, September 10, 2026 at 4:23 PM GMT+3 4 min read

• LPTH -1.82%

Prosper Stars & Stripes, a long/short equity fund, recently released its second-quarter 2026 investor letter. The letter can be downloaded here. In Q2 2026, the portfolio delivered a strong net return of +30.1% compared to the Russell 2000 Index's +21.5% return and the HFRX Equity Hedge Index's +10.3% return. The long book drove performance, generating a 43.2% gross contribution, while average net exposure remained relatively modest at 47%. U.S. economic growth remained resilient despite inflation concerns, elevated energy prices, and geopolitical uncertainty. Markets rallied sharply after easing U.S.-Iran tensions pushed oil prices lower, supporting renewed risk appetite. Small-cap equities benefited significantly, with Information Technology, Industrials, and Health Care leading gains, while Energy declined as crude prices fell. Year to date, the Composite returned +23.7%, slightly ahead of the Russell 2000's +22.6% and well above the HFRI Equity Hedge Index's +9.7%. Additionally, you can review the Portfolio's top 5 holdings to see its best picks for 2026.

In its second-quarter 2026 investor letter, Prosper Stars & Stripes highlighted LightPath Technologies, Inc. (NASDAQ:LPTH). LightPath Technologies, Inc. (NASDAQ:LPTH) designs, develops, manufactures, and distributes optical systems and assemblies. On September 9, 2026, LightPath Technologies, Inc. (NASDAQ:LPTH) closed at $10.14 per share. Over the past month, LightPath Technologies, Inc. (NASDAQ:LPTH) declined 21.70% and its shares gained 91.32% over the past 52 weeks. LightPath Technologies, Inc. (NASDAQ:LPTH) has a market capitalization of $641.71 million and its stock has traded within a 52-week range of $5.17 to $18.94.

Prosper Stars & Stripes stated the following regarding LightPath Technologies, Inc. (NASDAQ:LPTH) in its Q2 2026 investor letter:

"The market for space communication is large and growing. Within that market, LightPath Technologies, Inc. (NASDAQ:LPTH) is a provider of camera lens technology, a high value component for sensing applications. Legacy contracts were for heat-seeking missiles, while current growth is driven by intelligence and missile defense, counter UAS systems, and longer-term next generation projects including the Golden Dome initiative. This is a key need for the U.S. and one that the government wants to procure from domestic firms. LightPath has exited China, which was once half of the company's operations. Further, China has restricted exports of germanium, a key input for high power IR and optical lenses. LightPath's Black Diamond technology avoids the use of germanium entirely, positioning the company favorable amid these restrictions. At the same time, LightPath is successfully migrating from a component supplier to a system supplier. This movement up the value chain is a classic strategy that drives revenue and margin expansion. In LightPath's case, this shifts the value of their content from under $50 per component in its legacy business, to $50 to $500 in recent business, to $1,000 to $500,000 in its current and prospective business. Given the high level of industry growth, the need for domestic supply chains, and an exponential increase in content value, we believe the company's revenue target of $150 million in the medium term, and double that in the long-term, are credible corporate goals."

LightPath Technologies, Inc. (NASDAQ:LPTH) is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 20 hedge fund portfolios held LightPath Technologies, Inc. (NASDAQ:LPTH) at the end of the second quarter which was 27 in the previous quarter. While we acknowledge the potential of LightPath Technologies, Inc. (NASDAQ:LPTH) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.

This article is originally published at Insider Monkey.