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.
A dominant day for Lockheed Martin
The Pentagon wrapped up the workweek with just six new defense contracts awarded Friday — $290 million in total value. With so little money on offer, just one company walked away with more than 60% of the funds on offer: Lockheed Martin (NYSE:LMT).
Specifically, America’s largest pure-play defense contractor won two contracts:
– $153.9 million to procure Surface Electronic Warfare Improvement Program (SEWIP) Block 2 systems that will upgrade Navy AN/SLQ-32(V) electronic warfare systems to improve their anti-ship missile defenses and situational awareness; and
– a smaller, $26.4 million award to upgrade the sonar systems aboard Navy Mk 48 Mod 7 torpedoes (known as the Common Broadband Advanced Sonar System, or CBASS).
The only other publicly-traded U.S. stock winning money from the Pentagon Friday was shoemaker Wolverine World Wide (NYSE:WWW). The Rockford, Mich. company was awarded $39.2 million to supply the U.S. Navy, Air Force, and Coast Guard with an unspecified number of “men’s and women’s leather dress shoes.”
Insider trading notes
Taking a quick look at insider transactions at both these companies, we see little of real significance. While there have been more insider sales than purchases at both firms, and total shares sold outweigh total shares bought at each, honestly, neither firm has seen very active trading — on either the buy or the sell sides — over the past three months.
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