Monday, December 28, 2015

"I am out there looking for "The Rainmaker". I am willing to speculate at this time that Lockheed Martin Corp. (LMT) will need to purchase Oshkosh Corp., (Symbol OSK) (Oshkosh Defense) because it is much easier than suing the Pentagon."

Dow Jones Industrial Average 17,520.49 (Down)  3:25 PM EST on 12/28/2015

"The Rainmaker" Moravian Tiles Works, PA.
Lockheed Martin Corp. is fit to be tied. First in October, Lockheed Martin and partner Boeing lost a $55 Billion Air Force bomber contract to Northrop Grumman. 

Lockheed Martin has filed suit along with its partner Boeing over losing the contract for the next-generation Long Range Strike Bomber to Northrop Grumman. That contract has an estimated value of approximately $80 billion.Lockheed Martin has also filed a lawsuit against the U.S. Department of Defense over losing the contract for next-generation combat vehicles to Oshkosh Defense.

The U.S. Army plans to procure 55,000 Joint Light Tactical Vehicles for both the Army and the U.S. Marine Corps through 2040, and is expected to spend approximately $30 billion funding the production by Oshkosh according to Bloomberg.

That is a lot of sales for Lockheed Martin, the world' largest defense company, not to be reporting to their fat-cat stock holders, not to mention the huge amount of the money spent on all the lawyers. 

The first part of the contract is worth $6.7 Billion , Oshkosh Defense News and the DOD just removed the stop work order for Oshkosh to start the build in 2016.

Here is where "The Rainmaker" comes in.  Oshkosh Corp. (Symbol OSK, $38.87) whole stock capitalization of the company is currently only $2.98 Billion dollars.  Lockheed Martin could just buy the whole company probably with an offer of $5 or $6 Billion dollars just to get Oshkosh defense.  They could make an offer at $65 - $70 a share and still be well ahead of the  game. It just seems like an obvious thing to do to me. Heck, they could even sell off the other parts of the truck manufacturing to Navistar or PACCAR. 

So my first speculative choice for 2016 is to own shares of Oshkosh Corp. (OSK) and then to see what happens. I don't think Lockheed Martin has much of a chance suing the Pentagon and winning. 

Don't feel bad for Lockheed Martin though, they get plenty of military contract builds.  They just want all the contracts to go to them because they are the big dog on the street!

So pick up some shares of OSK to start your new 2016 year. You get a 1.96% dividend while you wait for the "Rainmaker" to happen and you will own at worst a $39 a share company that is going to earn $3.52 per share in 2016. Not too shabby either way it goes.

Have a great New Year's Eve party and smoke some cigars, just like the fat-cats at Lockheed Martin. It is good to get one over on the big dog!


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