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.
What little money there was to be had went mainly to small, privately-owned construction firms building work for the U.S. Army Corps of Engineers. There were, however, two small awards won by publicly-traded firms that you can invest in. Specifically:
Britain-based BAE Systems (NasdaqOTH:BAESY) received a “definitization” (confirmation of a previously uncertain contract’s value) adding $13.8 million to the value of a February contract to perform repairs and alterations aboard the guided missile destroyer USS O’Kane (DDG 77) while it is in drydock at Pearl Harbor.
And Northrop Grumman (NYSE:NOC) won a $7.2 million contract to work on information technology, architecture and engineering, and command and control networks for U.S. Forces in Korea through 2020. This contract is said to contain “options” which, if exercised, would later increase its value to Northrop Grumman.
And that was basically it for publicly-traded defense contractors in Tuesday.
Insider trading notes
We’ve little to report on the insider trading front, either. As far as BAE goes, it’s a foreign-listed security, and as such, there’s little information on insider purchases and sales involving BAE.
In contrast, information about trading at Northrop Grumman is almost too plentiful. For example, we know that insider purchase transactions involving Northrop shares have outnumbered insider sales 11-to-5 over the past three months. However, the actual volume of shares purchased is outweighed by the number of shares sold by 38,042 shares.
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