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 huge day for Lockheed Martin
The Pentagon awarded eight new defense contracts Tuesday, valued at $1.725 billion total. One company took home 25% of the contracts on offer — and 47.5% of the funds: Lockheed Martin (NYSE:LMT).
As you might expect for a company that hopes, one day, to get half its revenues from building, servicing, and maintaining F-35 Lightning II fighter jets, both of Lockheed’s contract wins Tuesday concerned the F-35. Specifically:
– Lockheed received $718.3 million in additional funding on a contract to supply the U.S. Air Force, Navy and Marines, and also international customers, with spare parts, support equipment, logistics system hardware and software, “full mission” simulators, and supply chain management and engineering services.
-Separately, Lockheed was awarded $101.3 million to supply helmet mounted display systems to the U.S. Air Force, Navy and Marines, and also to international customers, including the Japanese and Israeli militaries.
Boeing (NYSE:BA) was another big winner Tuesday, winning one contract and part of another:
– $7.4 million to perform painting and other work on CH-47F Chinook transport helicopters for the militaries of Turkey and the United Arab Emirates; and
– $332.5 million for Boeing’s joint venture with Textron (NYSE:TXT), the Bell-Boeing Joint Project Office, to supply the Japanese military with five MV-22 Osprey tiltrotor aircraft.
Finally, Leidos (NASDAQ:LDOS) won a $99 million contract to supply the U.S. Army with “installation entry hardware and software” to control access to 35 military installations.
Insider trading notes
Insider transactions reports at each of Lockheed Martin, Boeing, and Textron have been mostly unpromising of late, with more insider sales than insider purchases reported at each of these three companies over the past three months. Leidos, in contrast, has seen no fewer than 22 insider purchases over the past three months, versus just one insider sales transaction. Total shares bought by insiders outweigh shares sold by 23,409 shares.
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