Amentum: The Vault of Secrets

Classic Spin-Off Situation With a "Free" Call Option on Potential Exotic Technologies

DISCLOSURE

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Summary

We Are Long Amentum (NYSE: AMTM).

We view Amentum as a classic post spin-off opportunity involving a durable, high-quality business now trading at a depressed valuation due to non-economic selling pressure. Importantly, we believe that the company has unrecognized “hidden assets” in the form of extremely advanced technology and engineering capabilities developed over many decades from within classified government programs and leading energy physics labs.

Declassified videos of Unidentified Anomalous Phenomena (“UAP”) that have been repeatedly captured on advanced military sensors offer direct evidence that someone has made advancements wildly beyond known science. This report reveals that Amentum allegedly has been involved for decades in top-secret programs to develop or reverse engineer these technologies. We therefore see a material undiscounted possibility that the company’s engineering capabilities may now even extend to novel propulsion, electromagnetic, or directed energy systems exhibited by these purportedly unidentified craft.

Because most market participants seem to be completely unaware of the company’s decades-long involvement and contributions to highly classified technologies in the first place, we view this situation as analogous to a “free” call option embedded within a consistently profitable business. A stampede of index fund selling and a sector-wide panic over the potential impact of Elon Musk & Vivek Ramaswamy’s new Department of Government Efficiency (“DOGE”) commission to cut government waste has pushed the stock to a valuation of less than 10x earnings. This seems to value the company as if it has suddenly become a dying/declining business even though management projects 4-6% intermediate term organic annual revenue growth and more than 10% annual free cash flow growth.

Lacking an established shareholder base and with minimal sell-side analyst coverage, this report reveals the company’s untold history. “Amentum” is a recently created corporate name that masks a collection of storied government contractors that have been acquired and folded together, including EG&G and its legendary “special projects” division. As detailed in this report, the company has been trusted with many of the nation’s most important core technological secrets of the last 80 years beginning with its work on the Manhattan project. The restricted data in the company’s archives is reportedly so highly classified that even sitting United States Presidents have been denied access in the past.

Amentum is deeply intertwined with the nation’s nuclear capabilities, energy physics research, NASA’s space program, Missile Defense Installations, and is ingrained in the engineering of the military’s most advanced aircraft, naval, space, and weapons systems. This makes Amentum an unappealing DOGE target, in our view, especially because most of the business and its $45 Billion backlog is tied to a stable base of long-term contracts related to critical military facilities and operational infrastructure. Amentum publicly features an extensive portfolio of cutting-edge engineering and development capabilities and is the government’s largest drone/unmanned aircraft services provider with extensive drone, anti-drone, hypersonic, and electronic warfare capabilities. Elon Musk himself even recently declared that “future wars will be drone wars”.

However, our research uncovered evidence that Amentum’s publicly disclosed capabilities are likely just the tip of the iceberg. This report reveals the company’s undisclosed 70-year history at the Area 51 and Nevada Test Site complex, a highly classified military facility in the Nevada Desert, that it has operated for decades and used as a staging area for experimental “black projects”, nuclear weapons testing, reverse engineering of captured Russian planes, and its contributions to some of the most important top-secret aircraft created in the entire history of the United States.

Furthermore, documents and interviews with former employees and military officers referenced in this report, some of which have been publicly entered into the Congressional record, repeatedly identify Area 51 as the primary site of the company’s alleged decades-long reverse engineering of recovered extraterrestrial UAP craft.

It would be easy for many to dismiss UAP reverse engineering allegations as complete tinfoil hat nonsense, if not for the fact that the one thing that many senior Democrat and Republican members of Congress seem to currently agree on is the credibility and seriousness of the allegations about the apparent existence these programs made by former military officers under oath at recent congressional hearings. This follows years of mainstream media reports about secret UAP programs, leaked documents, and testimony from accomplished aviators who report frequent encounters with craft of unknown origin that dramatically outperform their fighter jets with spontaneous extreme acceleration, pinpoint hovering, and trans-medium navigation.

It is possible (if not probable), as many commentators have recently speculated, that yet to be revealed secret U.S. military craft are being conflated as UAP in these encounters. Amentum notably has extensive experience with electromagnetic and directed energy technologies that are often featured in theories about how UAP craft might operate. The company has conducted decades of classified high-energy physics research in advanced laboratories now even armed with the world’s most powerful supercomputer. Top-secret aircraft programs the company has contributed to in the past, such as the stealth bomber, SR-71, U-2 spy plane, and presumably the new RQ-180 stealth drone, had been flying for years from Area 51 before their existence was revealed publicly.

We believe Amentum benefits from both scenarios. If the UAP are top-secret U.S. military craft, then revolutionary breakthroughs in propulsion, electronics, and energy physics must have been achieved over decades in completely secret programs that Amentum was probably involved in. On the other hand, if the repeated allegations that the company has been reverse engineering recovered extraterrestrial craft are actually true, then Amentum would already have extensive experience with “priceless” otherworldly technologies it has been working to replicate.

A top-secret program involving potential breakthrough technologies of this magnitude is not without precedent. When the United States dropped the atomic bomb on Hiroshima, no members of Congress were aware the program even existed. The project had been the single most expensive engineering program in United States History, employed over one hundred thousand people, and even President Harry Truman was stunned when he was first briefed about the program’s existence late in the war. The mere possibility that Amentum may have spent decades working inside the equivalent of a modern-day Manhattan project involving either the creation or reverse engineering of secret technologies far ahead of known science introduces open-ended upside potential into this thinly researched and value-priced $5 Billion market cap company, in our opinion.

The entire premise of our investment thesis is that Amentum’s core business, without assigning any value to potential top-secret technologies, is attractively valued on both a relative and absolute basis at less than 10x earnings. The company’s current valuation is now below the lows of the COVID crash of a composite of industry peers, which Amentum currently trades at around a 40% discount to on a P/E basis. With non-economic selling pressure from price insensitive index funds likely having now subsided, our base case anticipates a return to at least the $35 range the stock was recently trading at before its precipitous decline (approximately 65% upside).

However, any achievements related to propulsion, energy, and electronics from Amentum’s top-secret work could introduce asymmetric upside potential over time, in our opinion. Revenues related to any such technologies would likely remain confined to steady growth in government contracts over the intermediate term. However, there is a long history of government contractors, including the company’s predecessor entities that were involved in the Manhattan project, dominating newly created industries by commercializing de-classified systems into many of the technologies we take for granted today.

NOTE: We have collected disparate public documents and online sources in an effort to understand the true nature of the company’s activities. Our analysis is based entirely on public documents and information. TO BE ABSOLUTELY CLEAR, WE DO NOT POSESS ANY CLASSIFIED MATERIALS THAT WERE NOT ALREADY RELEASED IN THE PUBLIC DOMAIN AND FREELY AVAILABLE ON THE INTERNET, NOR HAVE WE SPOKEN TO ANYONE KNOWN TO HAVE ACCESS TO CLASSIFIED MATERIALS OR GOVERNMENT SECURITY CLEARANCES ABOUT THIS TOPIC. THE COMPANY HAS NOT PROVIDED US ANY INFORMATION AND WE HAVE SIMPLY RELIED ON ITS PUBLIC DISCLOSURES AND MATERIALS.

Amentum Has Been Deeply Embedded Within Many of The Government’s Most Important Programs of the Last 80 Years.

Amentum became a public company in September via a spin-off/Reverse Morris Trust transaction that was completed just prior to the sector-wide panic about DOGE’s ambitions to cut government waste. Lacking an established shareholder base and operating in an industry that has quickly become deeply out of favor, we believe most investors have yet to understand the true nature of Amentum’s business beyond surface-level information about its end markets and the fact that approximately 80% of its revenues come from the U.S. government. Further increasing the information gap is the reality that the company seems understandably unable to feature or highlight (and may even be required by law to completely deny or downplay) some of its most important technological activities and engineering advancements because of their highly classified nature.

Amentum is a collection of storied government contractors including EG&G, Westinghouse Government Services, URS, DynCorp, and Lear Siegler that have been acquired and folded together over the years into what is now called Amentum (which we collectively also refer to in this report as “the company”). EG&G, in particular, was previously described as “the most powerful government contractor you’ve never heard of”. Because the Reverse Morris-Trust merged the Critical Mission Solutions business of Jacobs Engineering (the former parent company) with Amentum, which was a privately-owned company, we believe many investors are completely unaware of the details regarding the newly combined company’s 80+ year history of involvement with many of the government’s most sensitive and important classified programs that have led to major technological “leaps”.

The company has been deeply intertwined with the United States nuclear program since its original involvement in the Manhattan project, has decades of involvement with numerous top-secret aircraft programs (such as the U-2 spy plane, SR-71 Blackbird, and Stealth Bomber), was instrumental in developing technologies related to radar and missile detection, Nuclear submarines, NASA’s space program and moon missions, and has provided direct operational support to some of the country’s most sensitive and important military facilities for decades or since their inception. Because Amentum’s business is so deeply embedded in these critical government programs, 57% of which are related to Defense & Intelligence, it has withstood the test of time including myriad different presidential administrations and shifting congressional spending priorities.

We therefore view the business, whose average contract length exceeds seven years, as naturally DOGE resistant especially since it has a stable base of recurring revenues tied to the operations of critical facilities such as White Sands Missile Range, Cheyenne Mountain, Los Alamos, Andrews Air Force Base, Missile Defense Integrated Operation Center, and the Kennedy Space Center. Amentum operates and manages key energy physics labs including the Lawrence Livermore National Laboratory, Idaho National Laboratory, and Fermi National Accelerator (starting January 1^st). The company similarly has key infrastructure contracts that include, for instance, maintaining the entire aircraft fleet of the U.S. Customs and Border Protection Agency (an obvious Trump funding priority), maintaining the U.S. Army’s fixed wing aircraft fleet, the U.S. drone fleet, and long-lived nuclear waste disposal and decontamination projects.

Amentum Has Extensive Ties to Top-Secret Government Aircraft and Alleged UAP-Related Programs

Widespread public attention to the UAP issue was renewed following 2017 New York Times articles (here, here) that described military encounters with craft of purportedly unknown origin and propulsion that were captured on advanced military radar and imagery systems moving at hypersonic velocities and displaying sudden and instantaneous acceleration that seemingly defy the known laws of physics.

Two of the clearest examples of these incidents are contained in declassified military videos known as the “Tic-Tac” (from 2004) and “Gimbal” (from 2014). These incidents involved accomplished military pilots, Commander David Fravor and Ryan Graves, who have described their encounters with UAP craft in public interviews (here, here). At absolute minimum, we view these two incidents as direct evidence of the existence of advanced new propulsion, electronics, and energy systems far beyond known science.

Congressional hearings, including one held last month, have featured whistleblower claims that the government has secretly operated a “multi-decade” reverse engineering program of extraterrestrial craft (here). Documents released by congress at these hearings described a top-secret program, named “Immaculate Constellation”, to collect voluminous imagery of UAP and “reproduction vehicles” (imitation craft said to be constructed by the government). This program was allegedly so secret that anyone who even typed its name into a search engine would immediately attract surveillance from government operatives under a FISA warrant.

Additionally, “according to two reports, multiple military, intelligence and contractor officials corroborated claims that the U.S. government or private companies possess multiple craft of possible ‘non-human’ origin” (here, here). Much older documents we have reviewed even allege these programs have existed since the 1950’s and have been designated by the United States as more secret than even the Hydrogen “Super Bomb” program was, suggesting it could effectively be analogous to a modern-day Manhattan Project.

Even though the Department of Defense has denied these allegations, claims about the existence of these programs have been amplified by a bi-partisan collection of members of Congress. Marco Rubio, the incoming Secretary of State and Vice Chairman of the Senate Intelligence Committee, has asserted that high ranking US government officials, some of whom still work in government, have come forward with “first-hand knowledge” of these activities. The late Senator Harry Reid claimed knowledge of reverse engineering programs he was denied classification access to. More recently, Sens. Kirsten Gillibrand and Chuck Schumer have similarly commented about the importance of these whistleblower claims.

Because the credibility and seriousness of these allegations is one of the few things that members of congress from both political parties seem to agree on, we believe investors simply cannot afford to dismiss the potential existence of important and yet to be revealed new technological breakthroughs. Regardless of whether the government actually has been reverse engineering extraterrestrial craft or, alternatively, these claims are being used as cover for next-generation technologies that the military has been developing in secret, we found extensive alleged ties between Amentum and these programs.

Amentum has an undisclosed 70 year history at Area 51, a highly classified government facility located in the Nevada Desert, that the company has operated for decades and used as a staging area for its development and engineering contributions to the most important top-secret aircraft created in the entire history of the United States. At absolute minimum, we believe the company’s long history and key role at this facility demonstrates Amentum’s importance to critical government programs that are unlikely to see any impact from DOGE-related cuts.

Amentum’s role at Area 51 and the adjacent Nevada Test site dates to at least the 1950’s when the company (via EG&G) was working on nuclear weapons programs and testing activities. It was heavily involved in the development of Project OXCART’s top secret A-12 spy plane program. Over the ensuing decades, Area 51 was the home of EG&G’s legendary “special projects” team which led highly classified “black projects” including the research and development of numerous highly advanced aircraft technologies.

The company’s elite engineers accomplished important Cold War achievements including top-secret government reverse engineering programs of adversarial technology, such as a Russian Mig 21 fighter at Area 51 (below). A profile of this effort described how “the EG&G Special Projects Group appeared to have advanced expertise in this technical process of reverse engineering aircraft”

Evidence shows the Special Projects team also operated from within SIGMA-4 (“S-4”), which is a secretive installation located 10 miles south of Area 51 near Papoose Lake, Nevada. EG&G, of course, was folded into modern day Amentum which now appears to operate the Area 51 complex / Nevada Test Site under a wholly owned subsidiary named JT4. JT4 now occupies the “Special Projects” offices and Amentum is the current operator of the notorious “Janet Airlines”, a classified fleet of passenger aircraft that fly staff and government personnel on red-striped planes to a collection of top-secret bases including Area 51.

Area 51 and S-4 gained national prominence in the 1980’s after Bob Lazar appeared with investigative reporter George Knapp and made extremely detailed claims of working for EG&G at S-4 on reverse engineering programs of extraterrestrial craft. Lazar’s account has been the subject of skepticism and debate over the years and we direct interested readers to his appearance five years ago on Joe Rogan’s show for additional background.

George Knapp revealed in 2023 that Alfred O’Donnell, one of the senior most EG&G managers at Area 51, shared with him details about EG&G’s alleged reverse engineering of extraterrestrial craft:

“Al O’Donnell did end up conforming, in fact, a lot of what Bob Lazar had told us. That there was a crashed saucer out there. That it was stashed near Area 51. That it was studied. That they did try to reverse engineer it”

Lazar and O’Donnell are among numerous individuals that have made similar allegations about the company’s involvement with reverse engineering and UAP-related programs over many years. Notably, documents submitted by journalist Michael Shellenberger into the Congressional record contain extensive allegations about the company and Area 51’s role in reverse engineering and/or reproduction vehicle programs including:

A document created by AARO, a government office set up to investigate UAP related issues, also describes allegations involving an EG&G/JT4 employee and reverse engineering programs:

EG&G Special Project’s parking lot was the site of the meeting described in the “Wilson-Davis Memo” (here), a document referenced at recent congressional hearings that was found among the files of astronaut Edgar Mitchell following his death in 2016. The memo allegedly records a meeting in which Admiral Thomas Wilson, then a Director of the Defense Intelligence Agency, describes his discovery of a UAP reverse engineering program that he was ultimately denied access to despite his senior rank.

Harald Malmgren, a highly respected senior aide to four different Presidents recently has begun speaking out about being briefed on reverse engineering programs during the Kennedy administration. He has further stated that recovered extraterrestrial technology “has enabled planning for moon to mars transportation in days, not years”:

Malmgren was referenced in a recent article describing how UAP craft were observed tracking Ballistic Missiles launched by the United States during tests in the 1960s, including this incident posted by the National Archives. However, during a test when the United States actually exploded a nuclear weapon at a high altitude, a UAP object tracking the missile was captured on EG&G cameras tumbling out of the ensuing nuclear fireball and the article suggests the crashed debris was retrieved by the Navy.

It is certainly possible, as many commentators have speculated, that the notion of reverse engineering programs is simply misdirection to conceal advanced secret U.S. military craft being conflated as UAP. For example, a 2023 profile claimed that:

“UFO mythology, shaped as it was by EG&G’s work at Area 51, would provide cover for some of the base’s real secrets and inspire later calls for answers from the government”.

Elon Musk has also recently opined that UAP sightings are classified programs of:

“new aircraft, new missiles, and things that are classified at such a high level that even those high up in the chain of command in the US military may not be aware they are being tested”.

Venture capitalist, Marc Andreesen, recently explained on the Joe Rogan show that: “we classified whole entire areas of physics in the nuclear era and made them state secrets…and that research vanished”. Rogan opined that:

“the more I look into it [the UAP issue], the more I think at least a healthy percentage of it is bullshit and there probably is some government projects where they’ve developed some very sophisticated propulsion systems that they’ve applied to drones” (24:01 minute mark).

Andreesen responded that: “of course we know that was the case for a very long time, for sure, from the 50s through the 80s, because we developed the stealth that was highly classified, and the SR-71 was brand new at one point”.

Notably, the company’s “special projects” unit worked on both the Stealth Bomber and SR-71 which were both developed and tested extensively at Area 51 long before their existence was revealed publicly. For instance, the Pentagon held a 1980 press conference announcing a “new” stealth technology after it had been secretly flying successful prototypes of stealth planes for years and it did not allow the actual Stealth Bomber to be publicly seen in the open until 1988.

By 2006, Area 51 was reportedly far along in the development and testing a variety of next generation secret unmanned aerial vehicles including stealth drones amidst the War on Terror. The most advanced known stealth drone we’re aware of is presently the RQ-180 (successor to RQ-170), which was spotted over Area 51 in 2021 and has yet to be officially acknowledged. While state of the art electronic capabilities are allegedly embedded in its systems, the RQ-180 uses a conventional propulsion system that differs significantly from the UAP craft like those observed in the Tic-Tac and Gimbal videos. There have been unconfirmed rumors of craft with unconventional propulsion systems tested at Area 51 for quite some time, but there is no definitive proof that any such aircraft have actually been developed.

Amentum Has Worked For Decades On Technologies Associated with UAP Craft

Importantly, we found three disclosures in Amentum’s SEC filings which confirm the company’s decades long involvement with emerging technologies that rely on advanced physics, but offer little explanatory detail likely due to their classified nature:

· “decades of experience in key technology areas such as microelectronics, unmanned, autonomous, electromagnetic spectrum, and directed energy“.

· “a longstanding history in areas such as adversarial electromagnetic attack, unintentional electromagnetic interference and electromagnetic environmental effects”

· “providing technical and engineering support to DARPA for approximately 30 years on emerging technology and R&D-related projects including hypersonics, autonomous systems, directed energy, and classified space systems”

We find Amentum’s disclosures especially interesting because microelectronics, directed energy, unmanned, autonomous, and electromagnetic spectrum are viewed as complementary technologies that are often jointly associated with theories about the novel propulsion and electrical systems that would be required for the observed UAP craft to achieve feats of sudden movement, extreme acceleration, and pinpoint hovering that wildly exceed conventional aircraft. We note that intense electromagnetic activity has featured prominently in UAP observations including radar disruptions and electromagnetic interference with the instruments and systems of military pilots. The consistent reports of colored glowing lights or plasma halos surrounding UAP have been hypothesized as ionization effects from directed energy technologies embedded in the craft.

Amentum also has conducted extensive energy physics research and notably operates and manages Lawrence Livermore National Laboratory, the home of the world’s most powerful supercomputer, “El Capitan”, which is used “to advance nuclear weapon science and scientific discovery” (below):

The company also has a longstanding history of work at both other national security labs, Sandia National and Los Alamos. Amentum also operates Idaho National Laboratory, which is known for its work on deep space propulsion systems. The company has conducted decades of research into nuclear and experimental propulsion technologies including magnetohydrodynamic and pulsed power systems. Amentum also has a contract with NASA’s Ames Research Center for space science and exploration.

The company has extensive experience with Plasma technologies and currently provides engineering services at Princeton Plasma Physics Laboratory, where energy experiments are being conducted with a giant magnetic fusion device (below right). The company also will begin operating the Fermi National Accelerator, one of the leading particle physics laboratories in the world, on January 1st (below left).

Additional work has included high-energy applications such as high-powered lasers, electromagnetic pulse, particle beams, plasma shields, and space weapons. The company had a meaningful role in Ronald Reagan’s “Star Wars” Missile Defense Program many years ago, and we note that the United States has been publicly reported as having significant Directed Energy Weapons capabilities which are now being used to combat drones. Amentum also has cutting-edge electronic warfare systems, which rely on advanced electromagnetic spectrum technologies, that are the subject of existing government contracts.

Although no conclusive public evidence has surfaced demonstrating that Amentum or any other company or country has made the type of revolutionary scientific breakthroughs in energy and physics that would be required to engineer UAP craft, the fact that the UAP have been repeatedly captured on advanced military sensors and video performing feats that seemingly defy the known laws of physics offers direct proof that someone has made technological advances far beyond our current understanding of science.

If the UAP are top-secret U.S. military craft, then revolutionary breakthroughs in propulsion, electronics, and energy systems must have been achieved over decades in complete secrecy. On the other hand, if the repeated allegations that the company has been reverse engineering recovered extraterrestrial craft are actually true, then Amentum would already have extensive experience with “priceless” otherworldly technologies.

A top-secret program involving potential breakthrough technologies of this magnitude is not without precedent. Investigative reporter Annie Jacobsen has described how the Atomic Energy Act created a secrecy infrastructure related to programs of vital national security. Using the powerful “restricted data classification” provisions of the act, secret programs at Area 51 have been “born classified” and lawfully shielded from disclosure to Congress and even the President of the United States in the past (emphasis ours):

“The Atomic Energy Commission could hire a private company to conduct research for the commission knowing that the company’s thinking and research would be born classified and that even the President of the United States would not necessary have a need-to-know about it…certain programs inside and around Area 51 were kept from the President [Clinton] on the grounds that he did not have a need-to-know”.

This specifically has included the company’s archives:

“So secret are the record groups in EG&G’s archives, even the President of the United States can be denied access to them, as President Clinton was”

This is an extension of the same secrecy process that shielded the Manhattan Project from senior government leaders. Jacobsen has also explained that, when the United States first dropped the atomic bomb on Hiroshima, no members of congress were aware the program even existed. “President Truman had been equally stunned when he was briefed” about the bomb program because he had been the Chairman of a Senate Committee on Government Defense spending “meaning he was in charge of watching how money was spent during the war, yet he’d had no idea about the atomic bomb”. Furthermore:

“The Manhattan Project employed two hundred thousand people. It had eighty offices and dozens of production plants spread out all over the country, including a sixty-thousand-acre facility in rural Tennessee that pulled more power off the nation’s electrical grid than New York City did on any given night. And no one knew the Manhattan Project was there. That is how powerful a black operation can be”.

Amentum Features An Attractive Portfolio of Advanced Technologies We View as Trump Beneficiaries

At an absolute minimum, we view Amentum’s extensive involvement with such important government technology programs as an under-appreciated asset that should help insulate the company from any DOGE related spending cuts. Amentum also features a portfolio of advanced technologies including nuclear and small nuclear reactor expertise, extensive space systems, hypersonics, radar/missile detection, nuclear submarine systems, and electronic warfare capabilities. We view each of these areas as likely beneficiaries of the changing technological landscape and the spending priorities of the incoming Trump administration. Because adversaries such as China and Russia are reportedly pursuing advances in these same capabilities, we see an “arms race” dynamic unfolding, the latest example of which was the stealth fighters China unveiled last week. This view seems to be shared by Peter Hegseth, Trump’s Secretary of Defense Nominee, who has declared “China’s building an army specifically dedicated to defeating the United States”.

Perhaps most notably, Amentum is the largest non-OEM unmanned aircraft solutions provider to the US government, with a variety of material drone and drone warfare contracts. Elon Musk himself has declared that “manned fighter jets are obsolete in the age of drones anyway” ,“future wars will be drone wars” , and “drone swarm battles are coming that will boggle the mind” , “America needs a large quantity of long-range drones (air, surface water & submarine) and hypersonic missiles” (below).

A variety of authorities have already called for increased funding of drone technologies amidst a constant stream of recent news reports about mysterious drones sighted over New Jersey. We recently even observed Amentum looking to hire unmanned aircraft pilots in New Jersey:

Amentum also possesses significant stealth drone engineering and counter-drone capabilities. As CEO, John Heller recently explained:

And finally, the SR-71 Blackbird and our role on research, development, test, and evaluation on that program and the work that we did to put that aircraft up in the sky and it did so well and positioned ourselves with trust to then move forward to be a leader in UAV engineering and now, today, counter unmanned system development and engineering

As a small example, we learned of a demonstration countering swarms of “dark drones” (below). Amentum already disclosed one large Homeland security contract related to drone defense and has a variety of drone detection and radar systems (here). It also has a partnership related to surveilling the Southern Border and is working on integrating artificial intelligence systems into drones.

Amentum Features A Stable Base Of Long Term Contracts

As we analyze Amentum’s business, we see it as having much lower risk to DOGE than the draconian impact the market seems to be currently pricing in. Sure, the company probably has various contracts at the margins (such as a relatively small African peacekeeping contract we found) that could be at risk under certain scenarios. But the plan that Musk and Ramswamy articulated in their November WSJ op-ed is largely related to federal workers, fraud, waste and abuse, and is anticipated to skew heavily to non-defense/national security related categories.

We see Amentum’s activities as naturally insulated from DOGE concerns because a significant portion of its business and $45 Billion backlog comes from long term contracts, currently averaging more than seven years, linked to key infrastructure and assets. Approximately 17% of Amentum’s business, appears tied to the development of nuclear technologies and long-lived nuclear waste remediation and disposal projects that seem unlikely to be of interest to DOGE. These projects include large contracts related to Hanford, Oak Ridge, Savannah River, and West Valley. As Amentum explained at its Capital Markets Day:

“it's fair to say this market has some key tailwinds. If you just think about the US, the Department of Energy has talked about more than $500 billion dollars environmental liability that will need to be worked in the coming decades. That's great opportunity for us. It's a stable opportunity for us.”

A significant portion of its government business is tied to critical facilities that the company has, in many cases, directly operated or supported for decades or since inception. This creates a stable base of recurring revenues tied to the operations of critical facilities such as Los Alamos, King Bay Submarine Base, Cheyenne Mountain, Andrews Air Force Base, and the Kennedy Space Center. Amentum operates and manages key energy physics labs including the Fermi National Accelerator, Lawrence Livermore National Laboratory, and Idaho National Laboratory. The company similarly has key infrastructure contracts that include, for instance, maintaining the entire aircraft fleet of the U.S. Customs and Border Protection Agency (an obvious Trump funding priority), maintaining the U.S. Army’s fixed wing aircraft fleet, and the U.S. drone fleet. Amentum also has key contracts related to Military Command and Control systems including support of the Missile Defense Integrated Operation Center and NORAD’s Space Command. Also Defense Test and Readiness facilities such as White Sands Missile Range, Navy’s Pacific Missile Range Facility, Air Force’s Utah Test and Training Range, and the Navy’s Atlantic Undersea Test and Evaluation Center.

We like these facility and infrastructure contracts because we view them as a relatively boring and durable stream of recurring revenue. They are also subject to existing GAO audits and the operating margins are less than 10% and therefore unlikely to be a significant source of waste, fraud, or abuse. To the extent DOGE impacts Defense spending, we expect them to focus on “target rich” areas such as, for example, the various government suppliers who have been earning windfall margins for years from selling their parts at wildly inflated prices to the government.

We Believe Amentum Has Substantial Upside Potential.

We believe the stock has been dislocated to these levels primarily because of its deletion from the S&P 500, which it was too small for from the beginning and was only temporarily included because its former parent company, Jacobs Solutions, was a member. The non-economic selling pressure, which seemed to reach a crescendo on December 20^th, appears to have been exacerbated by a sector-wide panic about DOGE spending cuts as well as a recent record 14-day consecutive rout in value indices.

Amentum’s core business is attractively valued on both a relative and absolute basis at around 9x earnings, in our view. This valuation is below the lows of the COVID crash of a composite of industry peers, which Amentum currently trades at around a 40% discount to on a P/E basis. Our base case, anticipates a return to at least the $35 range the stock was trading at just several weeks ago before its precipitous decline (65% upside).

This assigns no value to any exotic technologies derived from top secret programs, which we view as a “free” call option, especially if any major advancements in propulsion, energy, or electronics systems have been made. While revenues from these top-secret programs will likely be confined to steady growth in government contracts over the intermediate term, there is a long history of government contractors, including those involved in the Manhattan project such as EG&G, going on to dominate entire newly created industries by commercializing de-classified systems into many of the technologies we take for granted today.

Perhaps the best known example of this is Bell Labs, who commercialized previously classified technologies to create entire new industries involving many of the innovations we take for granted today such as fiber optics, cellular communications, transistors, satellite communications, and microwave technologies. EG&G itself commercialized technologies it first derived from its classified Nuclear and energy work into a valuable instruments division that later became Perkin Elmer (now Revvity Inc NYSE: RVTY). This is also the origin of Amentum’s nuclear engineering, nuclear decontamination, and weapons of mass destruction detection business units. For example, “EG&G would so dominate the radiation-detection market that the laboratory built at the Nevada Test Site for this purpose was initially called the EG&G Remote Sensing Laboratory”.

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