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.
Nearly $2 billion in Pentagon dollars spent
The Pentagon closed out the month of June Tuesday with a final $1.89 billion worth of contract awards. Among the biggest winners of the day:
Boeing (NYSE:BA) landed the day’s single biggest award by dollar value, $358.9 million in additional funding to acquire “long-lead items” needed to build 29 new P-8A Poseidon maritime surveillance aircraft. 25 of these aircraft will be destined for the U.S. Navy once built, with the final four planes going to the Royal Australian Air Force. Among other awards won by Boeing, the company will receive $85 million from the U.S. Missile Defense Agency, in payment for the company to perform 600,000 hours of unspecified work for MDA on “future task instructions.”
United Technologies (NYSE:UTX) was the day’s second biggest winner, receiving $269.3 million in additional funding for work maintaining the F119 engines that power U.S. Air Force F-22 Raptor stealth fighter jets.
Third in line came British defense contractor BAE Systems (NasdaqOTH:BAESY), winner of a $110.4 million contract to build 36 new M88A2 Heavy Equipment Recovery Combat Utility Lift Evacuation System (HERCULES) vehicles for the U.S. Army.
Honorable mention goes to Raytheon (NYSE:RTN), which landed a $42.2 million contract from the U.S. Special Operations Command to support radar systems such as the Silent Knight terrain-following/terrain-avoidance (TF/TA) radar used for low-altitude missions run by SOCOM.
Insider trading notes
Recent contract wins notwithstanding, insider trading at these companies (BAE excepted — because insider trading data on foreign-listed securities is not available) has been less than encouraging. Neither Boeing nor United Technologies has filed Form 4 reports detailing even one single insider purchase in the past three months. Both companies have seen insider selling, however.
As for Raytheon, some non open market insider acquisitions have taken place. But even so, insider sales transactions outnumber insider acquisitions 3-to-1 over the past three months. And the number of actual shares traded shows shares sold outnumbering shares purchased by more than 6-to-1.
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