Elon Musk and Vivek Ramaswamy are targeting lowering government spending with the newly announced Department of Government Efficiency (or D.O.G.E. for short). An aircraft component company is named as the perfect place for the duo to start in a new short report from The Bear Cave.
What Happened: President-elect Donald Trump announced the Department of Government Efficiency recently and Musk said the new department will "send shockwaves through the system, and involve anyone involved in government waste."
A short report from The Bear Cave author Edwin Dorsey suggests the D.O.G.E. should start with aircraft component company TransDigm TDG, which has a market capitalization of $72 billion.
The short report alleges TransDigm has used acquisitions to become the sole producer of some aircraft parts and in return raised prices for customers, which includes the Department of Defense.
Benzinga reached out to TransDigm for comment and did not hear back at publication.
"Prices for TransDigm parts have increased 40%+ per year for decades and the company has faced numerous allegations of price gouging the U.S. government as well as allegations of accounting fraud," Dorsey writes.
Dorsey said hints from Musk and Ramaswamy suggest looking at government waste at the Pentagon.
"The Bear Cave also believes this will change under the incoming Trump Administration and that TransDigm should be target #1 for the Department of Government Efficiency."
Musk recently took notice of a tweet from Donald Trump Jr. that highlighted Boeing allegedly overcharging the Air Force, Dorsey added.
Ramaswamy suggested that large-scale audits at government agencies like the Pentagon could yield "significant savings."
In the short report, Dorsey highlights past looks into TransDigm by Congress.
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TransDigm's Past History: The short report highlights a 2022 House Oversight Hearing on TransDigm.
"TransDigm manufactures a product called the linear actuating cap, which was used in the Eagle F-15 and C-125 transport aircraft. According to TransDigm, the part only cost $189 to make, but the company charged the Defense Department over $7,000," House Oversight Chairwoman Carolyn Maloney (D-N.Y.) said at the time.
Maloney used a graphic to illustrate the markups in aircraft parts for the Department of Defense by TransDigm, the short report added.
The short report also highlighted a 2019 hearing about TransDigm which saw Rep. Ro Khanna (D-Calif.) accuse the company of acquiring other suppliers so it can raise prices for existing customers.
"You purchased a company that made a part for $5,500, solenoid, and then after you bought it the price went up to $11,790. The part only cost $3,000. So what is the additional value when you're purchasing this and raising the price?" Khanna previously asked.
While past congressional hearings didn't find TransDigm broke the law, past concerns over price gouging could put the company on the radar of Musk and Ramaswamy as the short report said.
The defense market makes up around 40% of TransDigm's revenue, with the Department of Defense a portion of that total, the report said.
TDG Price Action: TransDigm Group stock is down 3.09% to $1,253.06 Thursday versus a 52-week trading range of $949.99 to $1,451.32. TransDigm stock is up 30% year-to-date in 2024.
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