Darren Farber on Iran, China, and the Rise of Neoprimes

**Patrick O'Shaughnessy** (0:00)
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**SPEAKER_2** (2:00)
Patrick O'Shaughnessy is the CEO of PositiveSum. All opinions expressed by Patrick and podcast guests are solely their own opinions and do not reflect the opinion of PositiveSum. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. Clients of PositiveSum may maintain positions in the securities discussed in this podcast. To learn more, visit p-s-u-m dot v-c.

**Patrick O'Shaughnessy** (2:27)
My guest today is Darren Farber and this is his second appearance on the show. Darren is the managing partner of Albion River, a defense-focused investment firm and he previously served as a special advisor to the Deputy Undersecretary of Defense. We recorded this conversation in the middle of the Iranian contingency and we spend most of our time on what winning actually means in a theater like Iran. We discuss why magazine depth matters for the American industrial base, lessons from Ukraine and what the rise of neo-prime defense companies will require from Congress. Please enjoy my second conversation with Darren Farber.
I think to begin, you have to define what it might mean for us to win some of these open theaters of war in the world right now. We came through this period where anyone that was a macro type person that I would have in that seat, would talk about this multipolar world in the US is retreating from the global stage and is not going to be the world police any longer, and we don't need the interaction with the rest of the world. Seems like we're in a very different world now.
Everyone's wondering what winning would even mean in a theater like Iran. And I'm curious for you to just riff on that.

**Darren Farber** (3:30)
So winning is politically defined. The Strait of Hormuz was open before this contingency at the end of the day. And so if all we get is the Strait of Hormuz back open, strategically maybe was a juice worth the squeeze, for lack of a better term.
I would argue that you've degraded an enormous amount of Iranian military capability, which is what the department's internal frago, their order, was to do. And so you have degraded that. But the Strait of Hormuz as an economic choke point has to open back up in order for commerce to work. But we're sitting here today, the straits functionally closed, the economy is still ripping here. The United States markets, you have high inflation. But I think the conventional wisdom is that America can withstand less pain than the counterparty.