Home » conflict sin stocks » Canada Pays A Weird Premium For Bullets To General Dynamics (GD)

Here’s an interesting story we’re digging into a bit:

As reported by The Globe And Mail (see the link below), the Canadian government spends approximately $160 million a year on bullets.

… That seems like a lot for a country famous for its peacefulness, although that is perhaps another story.

Bullets for military. Bullets for police. Bullets for the Fisheries department.

BULLETS FOR EVERYONE!

(Just kidding. Not everyone.)

Now, here’s the part that seems baffling and is worth looking into:

Along with the money it spends to actually pay for the bullets, Canada also spends an additional $70 million a year for the privilege of buying those bullets from the Canadian arm of General Dynamics (GD).

Basically every person in Canada is paying a “toonie” per person per year so Canada can buy bullets from just one source (and then they are paying for the bullets… that toonie is just for the privilege of buying from General Dynamics)!

That’s like going to Subway to buy a footlong cold cut combo, and not only paying $7.99 for it, but also paying $4.00 just for the privilege of buying a sub from Subway.

While ammunition is supposed to be sourced from a competitive bid process, the bullets (at least) seem to be coming from one loyal source… along with a cushy bonus.

How can investors benefit from this info?

That’s hard to say right now. This story has been out for a while and doesn’t seem to be ruffling any feathers. But if the weird deal ever does capture the attention of a bureaucracy-weary public, we could see the end of this sweetheart deal for General Dynamics (which could drop its share price, even marginally), and other conflict sin stock companies moving in to take up the slack.

 

Read the full article on The Globe And Mail

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