CALLLMT28 days ago13.3Kviews

Lockheed Martin: backlog composition changed more than backlog size

Backlog from the new customer set passed the traditional one for the first time. That diversifies the political and cyclical risk the multiple has always carried.

Adam Rosen@adam_rosen

The mechanism is backlog composition. Two order books of the same size behave differently if one is annually appropriated and the other is contractually committed, because only the second survives a budget cycle. The backlog disclosure now splits by customer type, and the newer category passed the traditional one this year for the first time. The position: long on Lockheed Martin, entry locked at publication and the exit dated rather than open-ended. The target is stated in the call block above and the horizon with it. Sized to the catalyst rather than to conviction, with the invalidation written into the kill-switch card instead of left implicit. The risk is that the new customer set proves as cyclical as the old one once its own budget pressure arrives.

Discussion · 6

Marco BianchiAUG 16

Useful framing. The mix argument is the part I had not considered properly. Would you underwrite this without the catalyst date?

Marco BianchiAUG 16

This is the second-order point everyone skips. The margin bridge is doing more work here than is acknowledged. What is the base rate on this kind of setup working?

Yael BrennerAUG 15

I think the setup matters more than the thesis here. The point about conversion rather than demand is the right one. Has anything in the last print changed the entry you would take?

Omri ShakedAUG 17

I have been waiting for someone to make this argument. The cohort split is the detail that everyone leaves out. Any view on how the read-across affects the rest of the group?

Ines FerreiraAUG 15

I think the setup matters more than the thesis here. The destocking signature is textbook and nobody is naming it. Does the thesis survive a soft guide next quarter?

Adam RosenAuthorAUG 16

Fair challenge. Invalidation is a close below the lock price on volume, and I should have written that into the card rather than leaving it implicit. (604)

Discussion · 6

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