This Stock Is Down 40% From Its Peak, So Why Is One Fund Betting $150 Million on It?

Dallas-based Permian Investment Partners reported a significant purchase of KBR (NYSE:KBR) in a November 14 SEC filing, increasing its stake by nearly 1.3 million shares shares, which contributed to an estimated $58.8 million position change from quarter to quarter.

What Happened

According to an SEC filing released on November 14, Permian Investment Partners increased its exposure to KBR (NYSE:KBR) by buying 1.3 million additional shares during the third quarter. The position’s value rose to $150.5 million from nearly 3.2 million shares as of September 30. The transaction lifted KBR to 17% of the fund’s U.S. equity AUM, up from 13% in the previous quarter, with the fund reporting $885.7 million in total AUM.

What Else to Know

Top holdings after the filing:

• NYSE:TIC: $193.9 million (21.9% of AUM)
• NASDAQ:GRFS: $173.8 million (19.6% of AUM)
• NYSE:KBR: $150.5 million (17% of AUM)
• NYSE:NRG: $125 million (14.1% of AUM)
• NYSE:ARMK: $81.7 million (9.2% of AUM)

As of Monday, KBR shares were priced at $42.97, down 27% over the past year and well underperforming the S&P 500, which is up about 13% in the same period.

Company Overview

Company Snapshot

• KBR delivers scientific, technology, and engineering solutions, including proprietary process technologies, digital platforms, and consulting services for government and commercial clients.
• The company generates revenue through contract-based services in government solutions (defense, space, intelligence) and sustainable technology solutions (process licensing, energy transition consulting, and digital operations platforms).
• It serves U.S., U.K., and Australian government agencies, as well as global clients in the energy, chemicals, and infrastructure sectors.

KBR, Inc. is a global engineering and technology company with a diversified portfolio spanning government and commercial markets. Its dual-segment strategy leverages deep expertise in mission-critical government services and proprietary sustainable technologies for industrial customers. The company’s scale, technical capabilities, and focus on energy transition position it as a partner of choice for complex, high-value projects worldwide.

Foolish Take

Permian’s move highlights a growing divide between market sentiment and operating performance. While shares remain well below their late-2024 peak, the underlying business continues to generate consistent cash flow, expand margins, and build backlog across mission-critical markets.

KBR’s latest quarter underscores that disconnect. Revenue came in at $1.9 billion, essentially flat year over year, but profitability told a different story. Adjusted EBITDA rose 10% to $240 million, with margins expanding to 12.4% from 11.3% one year earlier. Adjusted earnings per share increased 21% to $1.02, and operating cash flow reached $198 million for the quarter. Meanwhile, backlog and options totaled $23.4 billion, supporting multi-year revenue visibility even amid slower award timing.

Within the portfolio, this position now sits just behind the fund’s largest holdings, signaling conviction comparable to other core ideas rather than a tactical trade. That context matters. The fund already favors capital-light, cash-generative businesses with durable customer relationships, and KBR fits that profile through its government services and sustainable technology segments.

Glossary

AUM: Assets Under Management – The total market value of investments a fund or manager oversees.
Reportable AUM: The portion of a fund’s assets required to be disclosed in regulatory filings.
Stake: The ownership interest or shareholding a fund or investor holds in a company.
Exposure: The degree to which a fund or investor is invested in a particular asset, sector, or market.
Position: The amount of a particular security or asset held by an investor or fund.
Dividend Yield: The annual dividend payment divided by the stock’s current price, shown as a percentage.
Trailing Twelve Months (TTM): The 12-month period ending with the most recent quarterly report.
Contract-based services: Services provided under formal agreements, often with set terms and deliverables.
Process licensing: Granting other companies the right to use proprietary industrial processes or technologies, typically for a fee.
Energy transition: The shift from fossil fuels to cleaner, more sustainable energy sources.
Proprietary technologies: Technologies owned and controlled by a company, often protected by patents or trade secrets.
Mission-critical: Essential services or systems whose failure would seriously impact operations or objectives.

Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends KBR and Tic Solutions. The Motley Fool has a disclosure policy.