"Trends come and go, even on the stock market"

March 30, 2026. FRANKFURT (pfp Advisory). By the end of March, it will likely be clear that the first quarter of 2026 was marked by significant losses on the stock market. Driven largely by the war in Iran and its immense impact on energy prices, supply security, inflation, etc., there was a broad sell-off. And this was not limited to the risky asset class of stocks. Even supposedly safe havens like government bonds and even gold came under pressure. 2026 will be a difficult year on the stock market, at least as things stand so far.

Against this backdrop, newcomers to the stock market have reason to expect some rough sailing. Even in previous years (which were marked by rising stock prices), the environment for IPOs was difficult, and consequently few companies made it to the capital markets. Now, a complete blockage of the IPO pipeline would be a hardly surprising consequence. But that doesn’t seem to be the case; the first offerings got off to a good start, saw solid demand, and had successful debuts. I haven’t noticed any clear weakness with numerous postponements and cancellations. What is the secret behind this success? Quite simply. Everything making its way to the market is largely attributable to the defense sector. An industry that is experiencing a boom in light of the ongoing wars in Ukraine and now also in Iran. Furthermore, after having been practically ostracized years ago due to strict ESG rules for ethical reasons, the sector is suddenly viewed as unproblematic. The implications are immense, as one example clearly illustrates.

Vincorion, a newcomer to the stock market that produces energy, power, and stabilization systems for safety-critical applications in sectors such as aviation and defense, clearly illustrates the shift in investor sentiment. The group, which has now been successfully listed, was previously indirectly listed, as it was a business unit of the listed technology holding company Jenoptik. Jenoptik, currently listed on the MDAX, found a buyer in the private equity group STAR Capital in November 2021—just a few months before Russia’s invasion of Ukraine—and the sale was finalized on June 30, 2022.

The details are striking, especially from today’s perspective: At the time, the equity value was “in the mid-double-digit million-euro range,” plus pension obligations and earn-outs. The enterprise value stood at 130 million euros. By way of comparison: Following its IPO in 2026, Vincorion peaked at just under €1 billion in market capitalization. Without passing judgment, this was an impressive success for STAR Capital and the fund’s shareholders. In addition to the value creation within the Vincorion Group and the well-known geopolitical circumstances, the aforementioned shift in investor sentiment strikes me as relevant. As a reminder: Following the closing, the then-CEO of Jenoptik was quoted as saying: “Furthermore, with the sale of Vincorion, we now also meet an important criterion for the potential entry of ESG-oriented investors.”

This aspect is particularly interesting. Whereas a few years ago on the trading floor (driven largely by external forces such as regulators and NGOs), an increasing number of investors believed that defense stocks or companies with defense holdings were an absolute no-go and should be avoided accordingly, this view has been completely turned on its head in recent years. Defense is now considered ESG-compliant by many market participants. There are now few industries to which the capital market grants such high multiples. Funds specializing in this sector have seen massive inflows in recent years and have, in turn, contributed to the explosive demand for defense stocks on the trading floor.

I cannot and do not wish to judge the specific case of Vincorion here; the seller and buyer certainly always had understandable and consistent motives. Nor do I wish to offer any assessments of the mentioned stocks at this point. However, I would like to use these dramatic changes in value—or rather, changes in price—as an opportunity to encourage a certain degree of prudence among investors. When certain sectors are viewed so overwhelmingly as ones in which one absolutely must invest or must be avoided at all costs, prices can quickly become excessively high or low. This is often more a matter of the prevailing mood than sound reasoning. We should not forget: trends come and go, even on the stock market.