Here's Why Pelican Bay Capital Management Initiated a Position in AECOM (ACM)

Pelican Bay Capital Management (PBCM), an investment management company, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. PBCM Concentrated Value Strategy returned 8.5% in the quarter, compared to a 3.8% return for the Russell 1000 Value Index. The robust performance of AI-related stocks and commodities exposure drove the Strategy’s performance in the quarter. For the full year, the Strategy returned 20.6% compared to 15.9% for the Index. The firm seeks to invest in high-quality companies with a strong balance sheet. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, PBCM highlighted AECOM (NYSE:ACM) as a new addition. AECOM (NYSE:ACM) is an engineering and construction company that offers professional infrastructure consulting services. On February 6, 2026, AECOM (NYSE:ACM) stock closed at $101.03 per share. One-month return of AECOM (NYSE:ACM) was 1.60%, and its shares are down 6.45% over the past twelve months. AECOM (NYSE:ACM) has a market capitalization of $13.06 billion.

PBCM stated the following regarding AECOM (NYSE:ACM) in its fourth quarter 2025 investor letter:

"AECOM (NYSE:ACM) is the world’s largest engineering, design, and construction management firm. Over the past six years, the company has undergone a structural transformation, divesting its construction operations and exiting lower-return emerging markets to focus exclusively on Design Engineering and Project Management. This shift mitigates the risks associated with multibillion dollar "turnkey" project deadlines and budget overruns.

This transition has significantly reduced capital requirements and expanded operating margins. By removing the need to fund working capital for mega-projects or tie up cash in construction bonds, the balance sheet has strengthened considerably, as net debt-to-EBITDA has declined from 2.7x to 0.6x. The company’s financial return metrics have notably improved as Return on Invested Capital (ROIC) has risen to 14%, while Return on Equity (ROE) has reached 24%. With the higher capital burden of the legacy construction business, these metrics had been in the mid-single digits before the transition..." (Click here to read the full text)

AECOM (NYSE:ACM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 37 hedge fund portfolios held AECOM (NYSE:ACM) at the end of the third quarter, compared to 41 in the previous quarter. While we acknowledge the potential of AECOM (NYSE:ACM) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered AECOM (NYSE:ACM) and shared the list of best strong buy stocks to invest in. In addition, please check out our hedge fund investor letters Q4 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.