On November 20th I initiated a position in Lockheed Martin Corporation (LMT). I then acquired additional shares on December 15th at a slightly more favorable price.
LMT's share price has subsequently pulled back slightly and since my underlying thesis for investing in the company has not changed, I have acquired additional shares on December 31st.
In two recent (November 20th and December 15th) Lockheed Martin Corporation (LMT) related articles I disclosed that I had initiated a position in LMT and that I had subsequently acquired additional shares.
Subsequent to those two purchases, LMT announced on December 20th that it had entered into a definitive agreement to acquire Aerojet Rocketdyne Holdings, Inc. (AJRD) for $56/share in cash, which is expected to be reduced to $51/share after the payment of a pre-closing special dividend. This represents a post-dividend equity value of $4.6B and a total transaction value of $4.4B including the assumption of net cash. High level details of the proposed acquisition can be found here.
This transaction is expected to close the 2nd half of 2021 and management expects ~$0.1B of annual growth pre-tax cost synergies in the first two years.
After listening to the conference call in which management discussed the rationale for the proposed acquisition of AJRD and after reviewing the presentation which accompanied the conference call, I am even more convinced that LMT is an attractive long-term investment. Given this and that LMT is slightly more attractively valued than at the time I initiated a position, I have just acquired an additional 20 shares @ $354.883/share through a Core Account within the FFJ Portfolio which currently holds LMT shares.
On December 24th I received $442 in dividend income which represents the $2.60/share dividend payment ($2.21/share when I back out the 15% withholding tax) I received on the 200 shares I acquired in November. That dividend was sufficient to automatically acquire 1 additional LMT share.
Toward the end of January I anticipate LMT will declare another $2.60/share quarterly dividend which will be payable toward the end of March. I now hold 271 shares so on the basis of $2.21/share (after the 15% withholding tax) I will receive $596.70 which should be enough to automatically acquire 1 additional share.
In the Final Thoughts portion of my recent goeasy Ltd. article I touched upon the 'investment punch card' concept Warren Buffett recommends when making investment decisions. Clearly, I view LMT as one of my 'punches'.
Stay safe. Stay focused.
I wish you much success on your journey to financial freedom!
Note: Thanks for reading this article. Please send any feedback, corrections, or questions to [email protected].
Disclaimer: I have no knowledge of your individual circumstances and am not providing individualized advice or recommendations. I encourage you not to make any investment decision without conducting your own research and due diligence. You should also consult your financial advisor about your specific situation.
Disclosure: I am long LMT.
I wrote this article myself and it expresses my own opinions. I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article.