Yesterday I did an investor call with Michael Lewis of Lazard Capital Markets concerning the outlook for the defense sector as military spending priorities shift. You can read Lazard’s full report on my comments here. I warned that the possibility of budget sequestration is growing, potentially reducing the Pentagon’s budget by an additional $55 billion each year from 2013-2021. I stated that Lockheed Martin and Raytheon appear to be the best-positioned of the big five military contractors in the forward defense environment. I also noted multiple positives for General Dynamics and Northrop Grumman, while opining that reverses in Boeing’s defense business will probably lead management to focus most future investment on its commercial-transport lines. Please note (as I stated in my Lazard remarks) that I have relationships of one sort or another with all the companies mentioned.
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