London-based event-driven hedge fund Davide Leone & Partners has increased its stake in SES SA, now holding over 5% of the Luxembourg-based satellite company, as it positions for long-term upside from SES’s strategic shift into defence, according to a report by Bloomberg.

Fund founder Davide Leone views SES as undervalued, describing it as “the cheapest defence stock you can find in Europe,” despite a 21% post-earnings selloff. The hedge fund sees potential from government satellite contracts, the integration of Intelsat, and the company’s medium-Earth orbit (MEO) developments in partnership with K2.

Leone also highlighted near-term upside from a possible multi-billion dollar spectrum license sale in the US, with proceeds likely to be returned to shareholders, enhancing SES’s investment appeal.

Davide Leone & Partners, which manages over $1bn, focuses on companies with opportunities for value creation through strategic repositioning, governance improvements, and balance sheet optimisation. SES joins other key positions in the fund, including Italian lender Banco BPM and Telecom Italia savings shares.