Avantor Stock Down 46% This Past Year, but One Fund's $23 Million Bet Signals Turnaround Potential

On November 14, Chicago-based Kinney Asset Management disclosed a purchase of 470,000 Avantor shares, increasing its position by approximately $4.52 million, according to a new SEC filing.

What Happened

Kinney Asset Management reported a net addition of 470,000 shares of Avantor (NYSE:AVTR) in its latest quarterly portfolio update, according to a Securities and Exchange Commission (SEC) filing dated November 14. The post-trade position stands at about 1.85 million shares with a market value of $23.03 million at quarter-end, making it the fund's largest single equity investment out of three reported holdings.

What Else to Know

The Avantor stake now makes up 34.3% of the fund’s 13F reportable AUM.

Top holdings after the filing:

• NYSE: AVTR: $23.03 million (34.3% of AUM)
• NYSE: ALIT: $22.92 million (34.1% of AUM)
• NYSE: MHK: $21.17 million (31.5% of AUM)

As of Friday, shares of Avantor are priced at $11.52, down 46% over the past year and well underperforming the S&P 500, which is instead up about 16.5% in the same period.

Company Overview

Company Snapshot

• Avantor offers a comprehensive portfolio of laboratory materials, consumables, equipment, instrumentation, and specialty services, including high-purity chemicals, reagents, single-use assemblies, chromatography solutions, and lab equipment.
• The company generates revenue through the sale of proprietary and third-party products, as well as value-added services such as on-site lab support, procurement, and biopharmaceutical material development.
• It serves biopharma, healthcare, education, government, advanced technology, and applied materials customers across the Americas, Europe, Asia, the Middle East, and Africa.

Avantor, Inc. is a global provider of mission-critical products and services for the life sciences and advanced technology industries, with a strong presence in laboratory consumables and bioprocessing solutions. The company leverages its broad portfolio and global distribution network to support scientific innovation and manufacturing efficiency for customers worldwide. Avantor's scale and expertise in high-growth markets underpin its competitive position in the healthcare and research supply chain.

Foolish Take

Avantor is deep into a reset, and the market is still pricing it like the damage is ongoing. In the third quarter, revenue fell 5% to $1.62 billion, pressured by softer biopharma demand, while the headline loss of $712 million was driven by a $785 million non-cash goodwill impairment tied to its distribution business. The firm cited market conditions as well as performance for the impairment. But strip that out, and the business still generated $268 million in adjusted EBITDA, $172 million in free cash flow, and exited the quarter with leverage at a manageable 3.1 times adjusted EBITDA.

Management, meanwhile, is signaling optimism. Alongside restructuring and cost actions, the company authorized a $500 million share repurchase program, a notable signal given the stock’s collapse. For a fund with only three holdings, making Avantor roughly a third of reported assets suggests this is less about quarter-to-quarter noise and more about normalized earnings power once volumes stabilize.

The fund’s other two positions are also cyclical and out of favor, reinforcing that this is a portfolio built for mean reversion, not momentum. For long-term investors, Avantor is still risky, but the combination of recurring consumables revenue, cash generation, and aggressive capital return creates asymmetric upside if execution improves.

Glossary

13F reportable assets under management (AUM): The total value of securities a fund must disclose in quarterly SEC Form 13F filings.

Alpha: A measure of an investment's performance relative to a benchmark, indicating excess return or underperformance.

Trailing twelve months (TTM): The 12-month period ending with the most recent quarterly report.

Net addition: The increase in the number of shares or value of a holding after accounting for purchases and sales.

Stake: The ownership interest or percentage a fund or investor holds in a company.

Equity investment: An ownership interest in a company, typically through the purchase of its stock.

Market value: The current total value of a holding, calculated by multiplying the number of shares by the share price.

Bioprocessing solutions: Products and services used in the manufacturing of biological products, such as vaccines or therapeutic proteins.

Consumables: Items that are used up during laboratory or industrial processes, such as reagents, filters, or pipette tips.

Proprietary products: Goods developed and owned by a company, often protected by patents or trade secrets.

Value-added services: Additional services provided to enhance the core product offering, such as on-site support or custom solutions.

Distribution network: The system a company uses to deliver its products to customers across various regions or markets.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.