Blackwater’s Loss is DynCorp’s (NYSE: DCP) Gain
Last week, Blackwater Worldwide received the bad news that the U.S. Government could not renew its contract after the Iraqi government refused to renew its license to operate in their country. The decision stems from the 2007 incident where Blackwater security guards fired on, and killed 17 Iraqis in a disputed who-shot-first incident.
But their bad news could be investor’s gain.
Including Blackwater, the State Department uses three separate security contractors in Iraq. The only competition for the coveted security contracts now rests with Triple Canopy and DynCorp International (NYSE: DCP). For investors, DynCorp is the only publicly listed company of the three.
Before you think a few extra security guards in Iraq can’t be that expensive, consider that there are thousands of private security contractors in Iraq. They protect everything from government personnel to corporate executives and buildings, earning thousands a day. Blackwater’s contract in Iraq was worth nearly $2 billion – despite its poor performance reviews.
And Iraq isn’t the only hotspot these companies operate in. There are dozens of other hotspots around the world for private security contractors to “clean up” in – like Afghanistan’s reconstruction.
Companies mentioned in this article: DCP.