Amentum

Amentum is a major American engineering and technology firm that serves as a key contractor for the U.S. government, as well as for other governments and commercial clients worldwide. Think of them as the go-to experts for massive, complex projects in defense, national security, and energy. The company was formed in 2020 when its former parent, the publicly traded infrastructure giant AECOM, decided to spin off its government services division. This new, independent entity was then acquired by Private Equity firms, making it a private company unavailable for direct investment on the stock market. Amentum's story is a treasure trove of lessons for the savvy investor. While you can't buy its stock, its journey from a division within a larger company to a standalone powerhouse—and its subsequent merger and acquisition activities—perfectly illustrates several core Value Investing principles. It's a real-world case study in how corporate shake-ups can unlock hidden value, a concept that legendary investors have used to generate exceptional returns for decades. Studying companies like Amentum sharpens your ability to spot similar opportunities in the public markets.

You might not be able to invest in Amentum directly, but its corporate history is a masterclass in identifying market opportunities. Let's break down the key lessons.

Amentum was born from a Spinoff. This is when a parent company separates a division into a new, independent company. Value investors, most notably Joel Greenblatt, absolutely love spinoffs. Why?

• Unloved Children: Often, the spun-off division was a small, overlooked, or “boring” part of a larger, more glamorous corporation. Once set free, its new management is highly motivated to succeed, and the business can finally get the attention and resources it deserves.
• Information Gaps: Many large institutional investors who owned the parent company might be forced to sell their new shares of the spinoff. Perhaps the new company is too small for their mandate, or it doesn't fit their investment theme. This indiscriminate selling can temporarily depress the stock price, creating a bargain for those who have done their homework.

When AECOM spun off Amentum, it was a classic example. AECOM wanted to focus on its core infrastructure business, leaving the government services arm to chart its own course. An investor at the time could have analyzed both companies to see if the “corporate divorce” had created a mispricing in the market.

The legendary Warren Buffett famously looks for businesses protected by an Economic Moat—a durable competitive advantage that keeps competitors at bay. Amentum's business model is a great example of this. The company thrives on long-term, high-value government contracts. These are not easy to win. They require immense technical expertise, deep relationships, and a pristine track record. This creates high barriers to entry, making it difficult for new players to challenge established firms like Amentum. This predictable, recurring revenue from locked-in customers is a hallmark of a high-quality business—exactly the kind of enterprise a value investor seeks to own for the long term.

In 2024, it was announced that Amentum would merge with a division of Jacobs Solutions and then be acquired by a different private equity group. This type of complex corporate maneuvering falls under the umbrella of Special Situation Investing. While the target company, Amentum, was private, the event directly impacted a public company: Jacobs. An enterprising investor could analyze such a deal from the public company's perspective:

1. Is Jacobs getting a good price for the division it's selling?
2. Does the sale make strategic sense for the future of Jacobs?
3. How will the market react to the news?

These situations, including Merger Arbitrage, can create short-term price movements and long-term value that a diligent investor can capitalize on.

So, you can't log into your brokerage account and buy shares of Amentum. It isn't listed on the New York Stock Exchange or any other public market. It is privately held. However, the lesson is not about buying this specific company. It's about learning to think like a great investor. By studying the story of Amentum, you've learned to look for:

• Spinoffs: Corporate orphans that might be undervalued.
• Moats: Businesses with strong, sustainable competitive advantages.
• Special Situations: Mergers, acquisitions, and other events that can unlock value.

Keep these concepts in your toolkit. The next time you see a public company announce a spinoff or a major strategic sale, you'll be one of the few who knows to lean in and take a closer look. That's how real, long-lasting wealth is built.