August delivered a clean split between the sector and the broader tape. The Mesirow A&D Equity Composite rose 1.63% for the month while the S&P A&D index fell 3.15% — a reversal of July, when the composite declined 2.30% against a 6.78% drop in the S&P A&D. Broad equities were firmer, with the S&P 500 up 2.62% and the NASDAQ Composite up 3.93%. The airline complex sold off hard for a second consecutive month, with the Nasdaq US Benchmark Airlines Index down 11.95% and the S&P 500 Passenger Airlines Index down 11.52%. For owners of aviation aftermarket and MRO assets, the message is that public multiples are holding while sentiment on the passenger-carrier end of the value chain has deteriorated meaningfully heading into the back half of the year.
Missile defense remained the dominant procurement theme of the month, with awards concentrated in interceptor production, integrated air and missile defense engineering and command-and-control modernization. Sustained interceptor demand continues to push spend down into components, sub-tier inputs, testing and engineering services rather than concentrating it at the primes. Major contract activity included:
Mesirow Financial, Inc., member FINRA, SIPC.