Economy & PolicyExtended setexperimental liveNew

Federal Contract Prime Subcontractor Momentum

Updated rollingData needs: mediumlong only

2013

Belo, Gala & Li (2013), "Government Spending, Political Cycles, and the Cross Section of Stock Returns", Journal of Financial Economics 107(2), 305-324. Loose inspiration only; this family is a heuristic proxy, not a replication.

Read the paper →

In plain terms

When government contract flow surges in a NAICS sector, we go LONG firms in that sector (excluding the direct prime contractor) as subcontractor beneficiaries.

How it works

Heuristic proxy, not a paper finding: Belo-Gala-Li 2013 build an industry-level government-spending EXPOSURE measure (BEA input-output tables) and show it interacts with the presidential political cycle (high-exposure firms earn higher cash flows and returns under Democratic presidencies, lower under Republican ones; conditional long-short up to ~6.9%/yr). The paper does not study contract awards, post-award drift, or prime-subcontractor propagation. This family borrows only the broad premise that government demand is a priced, slowly-diffusing cash-flow shock, and trades a NAICS-level 30d contract-flow z-score spike (excluding the focal's own awards) as a second-order subcontractor-class LONG.

Live results

0 times picked on its own · 5 times inside a blend (3 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 5 such blended picks (3 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

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Data dependencies

Daily prices
Adjusted-close OHLCV for every US-listed ticker; primary price feed.
Federal contracts
A data feed this strategy reads, refreshed on its normal schedule.

Expected edge

Tested over: 1955-2009 (extended 1929-2009)

Second-order NAICS-level spillover of federal contract-flow bursts to candidate subcontractor-class firms; experimental heuristic with no direct paper analogue.

Example tickers where this is likely to fire

LMT RTX BA GD NOC

Illustrative only, the signal fires based on the live data, not a fixed list.

Related families

Federal Contract Award DriftCompany Events & Earnings

Big federal contract wins quietly preview revenue beats 1-2 quarters out. Long the ticker the day after a top-decile award.

Industry Lead LagReal-World & Alternative Data

If the sector ETF outperformed SPY recently but the stock hasn't caught up, info diffuses slowly — bet the laggard catches up.

Explore Federal Contract Prime Subcontractor Momentum on alphactor.ai

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