Amentum Defense Stock Hits $47B Backlog Milestone, Yet This Fund Walks Away Entirely

2025-12-26 03:28:19

The Paradox: Engine Capital Management just cashed out its complete position in Amentum Holdings (NYSE: AMTM)—635,255 shares worth roughly $15 million—despite the company hitting record numbers. This full exit raises eyebrows in the investment world.

What Triggered the Exit?

On November 14, Engine Capital disclosed it wiped its entire Amentum stake during Q3, marking a complete portfolio realignment. The fund had previously held a meaningful 3.2% of its assets in the defense contractor. While Amentum’s fundamentals look strong on paper, sometimes funds rebalance for reasons beyond company performance—portfolio restructuring, risk management shifts, or strategic pivots.

Why This Matters Now

Here’s the thing: Amentum just delivered Q4 results that most would call a home run. The numbers tell part of the story:

Q4 revenue hit $3.9 billion
Adjusted EBITDA reached $300 million
Free cash flow generated $261 million
Backlog expanded to a massive $47.1 billion—this is the real headline

That $47 billion backlog represents years of contracted work, giving the company serious revenue visibility. The stock has climbed 26% over the past year, beating the S&P 500’s 13% gain. Yet Engine Capital still walked away.

Current Portfolio Snapshot

After divesting Amentum, Engine Capital’s top holdings show a diversified defense/tech tilt:

AVTR: $246.1M (29.2% of fund)
NATL: $94.7M (11.2%)
LNW: $80.9M (9.6%)
ACHC: $64.0M (7.6%)
OFIX: $62.3M (7.4%)

What’s Amentum’s Game?

Amentum operates in mission-critical spaces—missile defense testing, government IT services, space contracts, and cyber intelligence. It’s not a cyclical business. With FY2026 guidance targeting up to $14.3 billion in revenue and $575 million in free cash flow, the long-term runway looks solid.

The company’s revenue generation depends on government and commercial contracts, positioning it as infrastructure for national security and defense spending—areas that don’t sweat typical economic downturns.

The Bottom Line

Sometimes a fund exit doesn’t signal weakness—it signals a portfolio shuffle. Amentum’s $47.1 billion backlog and strengthening cash flow suggest the business mechanics remain intact. Whether that $28.88 share price (as of Friday) represents value depends on your time horizon and risk tolerance. The stock’s volatility since its September IPO debut is worth noting for traders, but the underlying demand for mission-critical defense services keeps ticking.

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.