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August 16 Market Close: GovCon Index Down, Lockheed in Steep Red & Leidos Up After Deal’s Closure

GovConIndexDOWNExecutive 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

IndexValueNet Change% Change
GovCon Index82.155-1.031-1.239%
S&P 5002, 178.15-12.00-0.55%
Dow Jones Industrial Average18, 552.02-84.03-0.45%
NASDAQ5, 227.11-34.90-0.66%
Advancing GovCon Index Issues5
Declining GovCon Index Issues25
Unchanged GovCon Index Issues0

Top GovCon Index Net Gainers

SymbolCompany$ Current PriceNet Change ▴% Change
LDOSLeidos Holdings51.691.452.89%
GIBCGI Group48.970.190.39%

Top GovCon Index Percentage Gainers

SymbolCompany$ Current PriceNet Change% Change ▴
LDOSLeidos Holdings51.69+1.45+2.89%
GIBCGI Group48.97+0.19+0.39%
BABoeing *135.00+0.34+0.25%

Lowest GovCon Index Net Performers

SymbolCompany$ Current PriceNet Change ▾% Change
LMTLockheed Martin *256.77-9.73-3.65%
HIIHuntington Ingalls Industries165.24-4.04-2.39%
NOCNorthrop Grumman *217.10-2.71-1.23%
LLLL-3 Communications *148.16-2.21-1.47%
OAOrbital ATK71.67-1.70-2.32%

Lowest GovCon Index Percentage Performers

SymbolCompany$ Current PriceNet Change% Change ▾
LMTLockheed Martin *256.77-9.73-3.65%
EGLEngility Holdings31.24-1.18-3.64%
CSRACSRA *25.38-0.76-2.91%
HIIHuntington Ingalls Industries165.24-4.04-2.39%

* Also listed in the S&P 500 composite index

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