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 slow end to the work week
Heading into the holiday weekend, the Pentagon awarded $239 million in new defense contractsThursday. Large awards were largely lacking, but here were a few of the smaller contracts handed out:
Engineering firm Engility Corporation (NYSE:EGL) won $8.3 million to “assist the Office of the Deputy Assistant Secretary of Defense, Systems Engineering in the execution of statutory and regulatory policy, guidance, specialty engineering, and human capital functions” through March of next year.
Aerojet Rocketdyne (NASDAQ:AJRD), the company formerly known as GenCorp, was awarded $12.3 million to “improve the design, manufacturing, and supply chain efficiency” of “complex propulsion subsystems” used by the rockets of the U.S. Missile Defense Agency.
A second rocket tech firm, Orbital ATK (NYSE:OA), won a larger $23.6 million contract to support the upcoming launch of the ORS-5 SensorSat space vehicle (aka “Operationally Responsive Space 5” or “SensorSat,” which will monitor satellite traffic in geosynchronous orbit once launched in 2017.
And Raytheon (NYSE:RTN) was awarded $36.8 million to improve the performance of Air Force AIM-120D “AMRAAM” medium range air-to-air missiles.
Insider trading notes
Among these four named, publicly-traded companies, insider trading trends at Engility seem most propitious. Over the past three months, only six insider transactions have been notified to the SEC — all “buys.”
In contrast, both of the insider transactions recorded for Aerojet Rocketdyne have been sales, as have all seven transactions recorded for Orbital ATK — a total of 153,653 shares sold by insiders in three months.
Raytheon, meanwhile, has seen nine insider purchases in the last 90 days — and 27 insider sales, with a net of 70,854 more shares sold than bought during this period of time.
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