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.
Aircraft carriers go into the shop
The Pentagon opened up the month of July Wednesday with $439 million in new contract awards. Shipbuilder Huntington Ingalls (NYSE:HII) took the top prize, a $75 million indefinite-delivery/indefinite-quantity contract to support repairs aboard the nuclear aircraft carriers USS Nimitz (CVN 68) and USS Carl Vinson (CVN 70).
Among the other notable winners, Harris Corp (NYSE:HRS) was awarded $29.1 million to supply the U.S. Navy and the Australian military with a total of 138 Distributed Targeting System “B-kits,” a system for guiding munitions to strike multiple targets, used by F/A-18E/F fighter jets and EA-18G Growler electronic warfare aircraft.
Also, several energy firms — including Atmos Energy, (NYSE:ATO), Exelon (NYSE:EXC) subsidiary Constellation Energy, and Constellation subsidiary Integrys Energy Services — won awards to supply natural gas fuel to the Defense Logistics Agency. Atmos’s contract is worth $22 million over two years, while Exelon’s two wins are worth $22.5 million combined.
Insider trading notes
Among these four named, publicly-traded companies, insider trading trends at Exelon seem the most bullish. A dozen insider transactions have been notified to the SEC over the past three months — all “buys.”
In contrast, insider sales transactions outnumber insider purchases at Harris Corp. At Huntington Ingalls, although more insider purchases than sales have taken place over the past three months, the eight insider purchases amount to just 290 shares bought, total. Meanwhile, the one single sale recorded was for 10,000 shares.
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