Why One Hedge Fund Just Put $246 Million Into This Life Sciences Supplier
Key Points
New York City-based Engine Capital Management bought 14.2 million shares of Avantor in the third quarter.
The position value increased by $172 million from the prior period.
Post-transaction, the fund reported holding about 19.7 million Avantor shares valued at $246.1 million, making it Engine's largest holding as of September 30.
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New York City-based Engine Capital Management disclosed a buy of 14.2 million shares of Avantor (NYSE:AVTR), increasing its stake by an estimated $172 million in the third quarter, per a November 14 SEC filing.
What Happened
According to a Securities and Exchange Commission (SEC) filing dated November 14, Engine Capital Management, LP increased its position in Avantor (NYSE:AVTR) by 14.2 million shares during the third quarter. The value of this stake grew by approximately $172 million, resulting in a post-trade holding valued at $246.1 million as of September 30.
What Else to Know
Avantor now represents 29.2% of Engine Capital Management’s 13F AUM.
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 were priced at $10.93, down 48% over the past year and vastly underperforming the S&P 500, which is up 13% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of market close Friday) | $10.93 |
| Market Capitalization | $7.5 billion |
| Revenue (TTM) | $6.6 billion |
| Net Income (TTM) | ($82.2 million) |
Company Snapshot
- Avantor provides high-purity chemicals, laboratory supplies, single-use assemblies, chromatography resins, analytical kits, and specialized instrumentation for the life sciences and advanced technology sectors.
- The company generates revenue through the sale of consumables, equipment, and services, including laboratory and production support, procurement, and biopharmaceutical development solutions.
- Primary customers include biopharmaceutical manufacturers, healthcare providers, academic and government research institutions, and advanced technology companies worldwide.
Avantor, Inc. is a global supplier of mission-critical products and services supporting biopharma, healthcare, education, and advanced technology industries. The company leverages a broad portfolio and integrated supply chain to serve complex customer needs across multiple regions. Its scale, diverse offerings, and focus on high-growth end markets position Avantor as a key partner for organizations engaged in scientific research and production.
Foolish Take
Avantor’s deep drawdown has created a setup long-term investors know well: Structurally important businesses can fall out of favor long before fundamentals stabilize. That tension—between cyclical weakness and long-term relevance—is central to why this move matters. Engine Capital's increased concentration signals conviction that Avantor’s portfolio of mission-critical lab and production supplies remains indispensable even as the company works through operational missteps and a challenged demand backdrop.
The latest quarter underscored that reset. Net sales fell 5% to $1.6 billion, while a $785 million non-cash goodwill impairment drove a GAAP net loss of $712 million. Still, adjusted EBITDA of $268 million and free cash flow of $172 million show the business continues to generate meaningful cash, bucking the harsh headline print. Management also authorized a $500 million share repurchase, a notable signal of confidence in future cash generation and execution progress.
Within Engine Capital’s portfolio, Avantor now represents a dominant 29.2% weighting—far larger than its next-largest holding—suggesting the fund views the selloff as misaligned with long-term value. For patient investors, the setup resembles a classic recovery bet: durable end-market exposure, improving internal discipline, and a valuation reset driven more by sentiment than solvency.
Glossary
13F: A quarterly SEC filing required from institutional investment managers to disclose their equity holdings.
Assets Under Management (AUM): The total market value of investments managed on behalf of clients by a fund or firm.
Position: The amount of a particular security or asset owned by an investor or fund.
Holding: A specific investment owned within a portfolio or fund.
Reportable Assets: Investments that must be disclosed in regulatory filings, such as the 13F report.
Post-trade: The state of a portfolio or position after a transaction has been completed.
Buy (in fund context): The purchase of additional shares or securities to increase a fund's exposure to an investment.
Lagging: Underperforming compared to a benchmark or index over a given period.
Biopharmaceutical: Relating to drugs produced using biotechnology, often for medical or therapeutic use.
Consumables: Products that are used up and need regular replacement, such as laboratory supplies.
Single-use assemblies: Pre-assembled, disposable components used in manufacturing or laboratory processes to reduce contamination risk.
TTM: The 12-month period ending with the most recent quarterly report.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Light & Wonder Inc. The Motley Fool has a disclosure policy.
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