For many investors, the U.S. government seems a black box. Taxes go in, spending comes out — but with the exception of the occasional headline-grabbing megacontract, where the spending goes, and how much goes to whom, remains very much a mystery.
But if you look very carefully (and know where to look), you can sometimes get a glimpse at where the money is going. Believe it or not, one of the easiest places to spy on government spending is… the U.S. Pentagon.
Lockheed Martin sweeps the field
Tuesday was a fairly busy day at the Pentagon, with the Department of Defense announcing 11 separate contracts awarded, worth roughly $530 million in total.
Three small companies, including a subsidiary of Realogy Holdings Corp (NYSE:RLGY), split the day’s biggest prize, a $249 million U.S. Army contract to provide “relocation services for transferring Department of Defense civilian employees” over the next five years. But the company boasting the hands-down greatest number of contracts awarded was America’s largest pure-play defense contractor, Lockheed Martin (NYSE:LMT).
Lockheed walked away bearing no fewer than four contract wins Tuesday, including:
– a $12.9 million contract to perform “C-5 computer software updates” for the Air Force;
– $31 million more to test the Aegis weapons systems aboard five new Navy Arleigh Burke-class guided missile destroyers;
– $34 million more for an Air Force “Personnel Services Delivery Transformation” contract;
– and the coup de grace — $104.2 million for work on DARPA’s Long Range Anti-Ship Missile Accelerated Acquisition program. As the Pentagon confided, with Tuesday’s award included, the total value of Lockheed’s contracts awarded under this program is now approaching $307 million.
Insider trading notes
Over the past three months, insider trading activity at Lockheed Martin has been positive even though several insiders were selling. Director Daniel Akerson purchased 2000 shares at an average price of $190.16 last month. His two smaller previous purchases last summer outperformed the S&P 500 Index.
In contrast, insiders seem neutral on Realogy. Our database doesn’t report any open market insider purchases at the company over the past three months, versus only two insider sales. Usually moderate insider sales don’t indicate weak stock performance.
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