Why One Fund Dumped Its Entire $15 Million Stake as This Defense Stock Posted $47 Billion in Backlog
Key Points
New York City-based Engine Capital Management sold 635,255 shares of Amentum worth about $15 million in the third quarter.
The move marked an exit for Engine Capital, which reported holding no shares of Amentum as of September 30.
The position was previously 3.2% of the fund's reported assets.
On November 14, New York City-based Engine Capital Management disclosed that it sold out its entire position in Amentum Holdings (NYSE:AMTM), a move representing an estimated $15 million change in value.
What Happened
According to its SEC filing dated November 14, Engine Capital Management, LP reported a complete sale of its Amentum Holdings position during the third quarter. The fund eliminated 635,255 shares, an estimated $15 million transaction based on quarterly average pricing.
What Else to Know
Top holdings after the filing:
- NYSE: AVTR: $246.1 million (29.2% of AUM)
- NYSE: NATL: $94.7 million (11.2% of AUM)
- NASDAQ: LNW: $80.9 million (9.6% of AUM)
- NASDAQ: ACHC: $64.0 million (7.6% of AUM)
- NASDAQ: OFIX: $62.3 million (7.4% of AUM)
As of Friday, shares of Amentum Holdings were priced at $28.88, up 26% over the past year and outperforming the S&P 500, which is up 13% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of market close Friday) | $28.88 |
| Market capitalization | $7 billion |
| Revenue (TTM) | $14.4 billion |
| Net income (TTM) | $66 million |
Company Snapshot
- Amentum Holdings provides mission-critical services including test, training, and operations for missile defense, IT and engineering for defense and space, environmental remediation, and advanced cyber and intelligence solutions.
- The company generates revenue through long-term government and commercial contracts, focusing on technology-driven consulting, systems integration, and technical services.
- It serves U.S. government agencies, defense and intelligence clients, and energy sector organizations as primary customers.
Amentum Holdings is a leading provider of technical and mission support services to government and commercial clients, with a focus on aerospace, defense, and intelligence sectors. The company leverages its scale and expertise in critical mission solutions and advanced cyber capabilities to address complex national security and infrastructure needs. It combines its deep technical know-how with a robust contract portfolio, positioning itself as a key partner for clients requiring high-reliability, technology-driven solutions.
Foolish Take
Amentum’s recent rally underscores why understanding a full exit like this matters for long-term investors: When a fund divests following a stretch of strengthening fundamentals, it can signal a shift in portfolio strategy rather than a judgment on the business itself. The company just delivered a standout fourth quarter, posting $3.9 billion in revenue, $300 million in adjusted EBITDA, and $261 million in free cash flow, all while expanding backlog to a massive $47.1 billion and reducing its net leverage.
For investors, Amentum’s multi-year contract visibility, strong cash generation, and fiscal year 2026 guidance calling for up to $14.3 billion in revenue and as much as $575 million in free cash flow offer notable long-term appeal. The business is tied to mission-critical spending across defense, space, nuclear, and digital infrastructure—areas less sensitive to economic cycles. While the stock remains volatile since its public-market debut last September, the underlying growth trajectory appears intact.
Glossary
13F reportable assets: Investment holdings that institutional investment managers must disclose quarterly to the Securities and Exchange Commission (SEC) if above a certain threshold.
Assets under management (AUM): The total market value of all investments managed by a fund or investment firm.
Stake: The ownership interest or investment a fund or individual holds in a particular company.
Quarterly average pricing: The average price of a security over a specific quarter, used for estimating transaction values.
Mission-critical services: Essential services that are vital to the core operations or security of an organization or client.
Systems integration: The process of combining different technology systems and software to function as a coordinated whole.
Technical services: Specialized support involving engineering, IT, or scientific expertise provided to clients.
Contract portfolio: The collection of active contracts a company holds with its clients, often indicating business stability and future revenue.
TTM: The 12-month period ending with the most recent quarterly report.
Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amentum and Light & Wonder Inc. The Motley Fool has a disclosure policy.