Buying More of a Holding Mistakenly Caught in Crosshairs of Bessent Comment
We're taking advantage of a misconstrued fall in one of our positions.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
AXON | Buy | 25 | 655.50 | 308 | 3.6 |
After you receive this Alert, we will buy 25 shares of Axon Enterprise (AXON) at or near $655.50. Following the trade, AXON shares will account for roughly 3.6% of the Pro Portfolio.
On Wednesday we commented on the sharp drop in shares of Axon Enterprise, competitor Motorola Solutions (MSI) , as well as multiple defense companies, such as Lockheed Martin (LMT) , Northrop Grumman (NOC) , and others. After scouring various sources, it appears the pressure on those shares and others contained in the iShares US Aerospace and Defense ETF (ITDA), it appears the catalyst for the fall can be traced back to comments Wednesday from Treasury Secretary Scott Bessent.
The comment from Bessent was the following: "I do think our defense companies are woefully behind in terms of deliveries. So, we may have to — as their biggest customer — may have to prod them to do a little more research, do a little few stock buybacks, which is really what got Boeing (BA) into trouble…”
As of June, Axon had just $16.3 million remaining on an initial stock repurchase plan of $50 million that was authorized back in February 2016. We would argue that, given $2.2 billion in cash and equivalents on its balance sheet, Axon could easily complete that program without sacrificing ongoing R&D and related efforts.
Let’s also consider the growing recurring revenue nature of its business mix, and $10.7 billion in future contracted bookings vs. the $2.7 billion and $3.2 billion Wall Street expects Axon to deliver this year and in 2026.
While we recognize that, the longer the government shutdown goes on, we could see some impact on the federal business that Axon does have. But let’s remember the company’s exposure to state and local spending is far greater, with the federal government considered a target market for its Taser, body cameras, drones, and services. As we see it, AXON shares were carried lower with a “guilt by association” comment that wasn’t germane to them.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long AXON.
