Executive Mosaic’s GovCon Index dropped at least one full net point Tuesday for the first time since June 24 on a sharp drop in Lockheed Martin (NYSE: LMT) shares upon the defense contractor’s completion of the spinoff and subsequent merger of its government and technical services business into Leidos Holdings (NYSE: LDOS).
Lockheed was the GCI’s worst net and second-worst percentage performer after the Bethesda, Maryland-based company said the transaction and exchange offer for shareholders to acquire stock in the larger Leidos resulted in the repurchase of 9.4 million shares versus the 10 million buyback forecast communicated to investors in July.
The stock was down as much as 3.6 percent during early afternoon trade in its biggest intraday decline for almost six months.
The exchange offer also resulted in a share count reduction by almost 3 percent on Lockheed’s outstanding stock.
Leidos paid Lockheed a $1.8 billion cash dividend and the latter’s shareholders own 50.5 percent of the stock in the newer, larger Leidos to fulfill requirements for the deal to qualify as a tax-free, Reverse Morris Trust transaction.
Reston, Virginia-based Leidos led all GovCon Index net and percentage gainers after the deal’s closure was announced as the government services contractor now doubles in scale from $5 billion to $10 million in annual projected revenue.
“Today marks the next step in the evolution of Leidos. I’m excited about where we came from and what the future holds, ” Leidos CEO Roger Krone said.
Defense primes Huntington Ingalls Industries (NYSE: HII), Northrop Grumman (NYSE: NOC) and L-3 Communications (NYSE: LLL) were among the GovCon Index’s worst five net performers Tuesday.
Boeing (NYSE: BA) was the only GovCon Index- and S&P 500-listed gainer as the latter U.S. stock bellwether fell after New York Federal Reserve President William Dudley indicated the central bank could be ready as soon as next month to move on an interest rate hike.
According to Reuters, traders have priced in 50-percent odds of a rate hike versus 42 percent on Monday after Dudley made the comments to a group of central bankers in Jackson Hole, Wyoming.
Market Summary
| Index | Value | Net Change | % Change |
|---|---|---|---|
| GovCon Index | 82.155 | -1.031 | -1.239% |
| S&P 500 | 2, 178.15 | -12.00 | -0.55% |
| Dow Jones Industrial Average | 18, 552.02 | -84.03 | -0.45% |
| NASDAQ | 5, 227.11 | -34.90 | -0.66% |
| Advancing GovCon Index Issues | 5 |
| Declining GovCon Index Issues | 25 |
| Unchanged GovCon Index Issues | 0 |
Top GovCon Index Net Gainers
| Symbol | Company | $ Current Price | Net Change –´ | % Change |
|---|---|---|---|---|
| LDOS | Leidos Holdings | 51.69 | 1.45 | 2.89% |
| VEC | Vectrus | 32.63 | 0.52 | 1.62% |
| BA | Boeing | 135.00 | 0.34 | 0.25% |
| GIB | CGI Group | 48.97 | 0.19 | 0.39% |
| CAE | CAE | 14.06 | 0.11 | 0.79% |
Top GovCon Index Percentage Gainers
| Symbol | Company | $ Current Price | Net Change | % Change –´ |
|---|---|---|---|---|
| LDOS | Leidos Holdings | 51.69 | +1.45 | +2.89% |
| VEC | Vectrus | 32.63 | +0.52 | +1.62% |
| CAE | CAE | 14.06 | +0.11 | +0.79% |
| GIB | CGI Group | 48.97 | +0.19 | +0.39% |
| BA | Boeing * | 135.00 | +0.34 | +0.25% |
Lowest GovCon Index Net Performers
| Symbol | Company | $ Current Price | Net Change –¾ | % Change |
|---|---|---|---|---|
| LMT | Lockheed Martin * | 256.77 | -9.73 | -3.65% |
| HII | Huntington Ingalls Industries | 165.24 | -4.04 | -2.39% |
| NOC | Northrop Grumman * | 217.10 | -2.71 | -1.23% |
| LLL | L-3 Communications * | 148.16 | -2.21 | -1.47% |
| OA | Orbital ATK | 71.67 | -1.70 | -2.32% |
Lowest GovCon Index Percentage Performers
| Symbol | Company | $ Current Price | Net Change | % Change –¾ |
|---|---|---|---|---|
| ACM | AECOM | 33.44 | -1.65 | -4.70% |
| LMT | Lockheed Martin * | 256.77 | -9.73 | -3.65% |
| EGL | Engility Holdings | 31.24 | -1.18 | -3.64% |
| CSRA | CSRA * | 25.38 | -0.76 | -2.91% |
| HII | Huntington Ingalls Industries | 165.24 | -4.04 | -2.39% |
* Also listed in the S&P 500 composite index
