Now that carlyle Group has bolted from the defense industry, other investors may want to ask themselves why. The buyout behemoth, which ranked as one of the Pentagon's 15 biggest defense contractors between 1998 and 2003, sold its last major holding, United Defense Industries Inc., in 2004. By 2005, Carlyle didn't even make the top 100 and has just 1% of its assets in the sector today. "The smartest guys in defense investing are out," says industry expert Pierre Chao of the Center for Strategic & International Studies think tank. "What do they see that everybody else doesn't?"
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