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KBR headquarters in Houston, TX.
Courtesy: KBR

Company: KBR Inc (KBR)

Business: KBR provides scientific, technology and engineering solutions to governments and companies around the world. The company operates through two segments: Government Solutions and Sustainable Technology Solutions. Its Government Solutions (GS) business segment provides full life-cycle support solutions to defense, intelligence, space, aviation and other programs and missions for military and other government agencies in the United States, the United Kingdom and Australia. Its Sustainable Technology Solutions (STS) business segment is anchored by process technology that spans ammonia/syngas/fertilizers, chemical/petrochemicals, clean refining and circular process/circular economy solutions.
Stock Market Value: $7.91B ($59.36 per share)

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KBR shares over the past 12 months

Activist: Irenic Capital Management

Ownership: >1%
Average Cost: n/a
Activist Commentary: Irenic Capital was founded in October 2021 by Adam Katz, a former portfolio manager at Elliott Investment Management, and Andy Dodge, a former investment partner at Indaba Capital Management. Irenic invests in public companies and works collaboratively with firm leadership. The firm’s activism has thus far focused on strategic activism, recommending spinoffs and sales of businesses.

What’s happening

On Dec. 19, 2024, Irenic announced that it plans to push KBR to separate its Sustainable Technology Solutions segment from its Government Solutions segment.

Behind the scenes

KBR is a Houston-based science, technology and engineering solutions company that provides services to governments and companies globally. The company is divided into two segments: Government Solutions (GS) and Sustainable Technology Solutions (STS). The GS segment operates as a government contractor providing solutions to defense, intelligence, space, aviation and other missions for militaries and government agencies. The STS segment serves both government and private sector clients with its extensive portfolio of energy and sustainability-focused technology in four primary verticals: ammonia/syngas, chemical/petrochemicals, clean refining and circular process/circular economy solutions. While both units have established a strong foothold in their respective end markets, they are fundamentally different. Government Solutions is a low-margin mature business, while Sustainable Technology Solutions is a high-margin growing business. The GS segment has experienced revenue contraction since FY21 and has adjusted earnings before interest, taxes, depreciation and amortization margins of about 10%. Conversely, STS has grown revenue by an average of 16.7% annually since FY21 and has margins of approximately 20%.

In recent weeks, government contractors, including KBR, have experienced sector-wide de-rating in response to perceived risks associated with the incoming Trump administration. Investors have been speculating that the new Department of Government Efficiency (DOGE), with its mandate to slash federal spending, already pledging to trim $2 trillion from the federal budget, could result in a material decline in government contractors’ profitability. As a result, between Election Day and the report that Irenic had built a position in the company, shares of KBR fell more than 18%. However, KBR may have been unduly punished by DOGE speculation. In reality, KBR appears to be more insulated from these threats than the market currently perceives. First, while the company’s GS business does account for 75% of KBR’s revenue, it contributed less than half of its operating income in FY23. In addition, 25% of the GS business is international, primarily in the UK, sheltered from the potential effects of DOGE. Looking at the remaining 75% of that segment in the U.S. market, close analysis reveals that only relatively small portions of KBR’s services are expected to face any related estimated cost pressures. While much is currently uncertain, the threats to the GS segment seem, at this moment, overblown. Moreover, the STS segment may be a beneficiary of the incoming administration’s plans. Under the Biden administration, there was a moratorium on export permits for LNG plants and several projects were put on hold. The Trump administration plans to reverse this, which could be a tailwind for KBR as the company is well-positioned to win new and existing projects.
Perhaps enticed by KBR’s discounted valuation following the recent exogenous share price shock, Irenic has now entered the picture. Irenic has accumulated a position of more than 1% in the company and is urging management to separate its STS segment. These are fundamentally different businesses with distinct support needs, management requirements and end markets. Companies that don’t belong together should be separated for several reasons: (i) each can attract the appropriate shareholder base and be awarded the proper multiple; (ii) each can dedicate management focus and compensation to be more aligned with specific business needs; and (iii) separation can result in a reduction of corporate overhead costs, producing leaner and more efficient entities. KBR currently trades around 11.5 times enterprise value to the last 12 months’ adjusted EBITDA. Looking at peer companies, those of GS typically trade in this range, but those most like STS fetch an average multiple of 14-15 times EBITDA. Separating the two should re-rate the STS business creating value for shareholders before any cost savings from the separation. By separating the two businesses, there would be no need for a lot of the corporate costs the company presently incurs, which could result in a $50 million savings that goes right to the bottom line. Finally, ahead of any value creation, the company could buy back shares to create additional shareholder value. While each value creation lever on its own might not be incredibly compelling, the combination could result in a 50% increase in shareholder value.
Irenic is not the only shareholder who thinks a separation makes sense; many other shareholders share this view. To put it differently: Keeping the two companies together makes no sense. A few years ago, it would’ve been fair to argue that a spin-off of STS wasn’t feasible because of the unit’s size and youth. In 2021, the segment delivered an operating loss of $30 million and in the years after, management successfully made this argument saying the segment needed to be bigger to spin off. But STS now generates close to $400 million of EBITDA, and it is time for management to walk the walk. Irenic likes to work behind the scenes with management and use the power of persuasion to win the day. We expect the firm will be doing that here right up to either the announcement by KBR of a strategic review or the company’s nomination deadline on Feb. 14, 2025, whichever comes first. If no satisfactory announcement is made by Feb. 14, we would expect Irenic to do something that it has never had to do before – launch a proxy fight. However, given the shareholder support for a separation and the fact that there is an empty board seat (General Lester L. Lyles recently announced he will retire from the board effective after the 2025 annual meeting) we do not expect it will come to that. If Irenic is given a seat on the board, it will likely be for an independent director with relevant industry experience as opposed to an Irenic principal.
If KBR does pursue a strategic review, we would be remiss if we did not mention a similar and relevant situation. Elliott Investment Management has recently advocated for the separation of Honeywell into two companies, and Honeywell subsequently announced a strategic review of its businesses. Honeywell could be a potential strategic acquirer of parts or the entirety of KBR. Irenic’s co-founder, Adam Katz, was a former employee of Elliott Investment Management, and I am sure he still knows people over there.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

Direct File, the IRS’ free tax filing program, has expanded to limited taxpayers in 25 states for 2024 returns.
But the program’s future remains uncertain amid pushback from Republicans who will soon control the White House and Congress.
More than 130 Democrats this week urged Trump’s picks for Treasury secretary and IRS commissioner to preserve Direct File.

Hirurg | E+ | Getty Images

With the start of tax season approaching, Democratic and Republican lawmakers are split on the future of Direct File, the IRS’ free tax filing program.
Direct File, which recently expanded to limited taxpayers in 25 states, processed roughly 140,000 returns in 2024 during the pilot that launched mid-season. The pilot covered simple returns in 12 states.

The program has been controversial among Republicans, who have pushed to end the free filing service. The critique has raised questions about Direct File’s future, particularly under GOP control of the White House, Senate and the House of Representatives. 
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During his Senate confirmation hearing on Thursday, Scott Bessent, President-elect Donald Trump’s pick for Treasury secretary, was asked about the future of Direct File.
If confirmed, “I will commit that for this tax season that Direct File will be operative,” said Bessent, without commenting on future years.

Bessent’s comments come one day after more than 130 Democrats, led by Sens. Elizabeth Warren, D-Mass., and Chris Coons, D-Del., voiced support for Direct File.

“Direct File is making the process of interacting with the government more efficient, a goal we all can agree on,” the Democratic lawmakers wrote in a letter to Bessent and Billy Long, Trump’s pick for IRS commissioner.
The pilot program saved consumers an estimated $5.6 million in federal tax preparation fees and could save billions in the future, the Democratic lawmakers wrote. “We disagree with our colleagues who are calling on the President to pull the plug.”

Rep. Adrian Smith, R-Ne., along with 27 House Republicans in December wrote a letter to Trump, urging the president-elect to end Direct File via a day-one executive order.
“The program’s creation and ongoing expansion pose a threat to taxpayers’ freedom from government overreach, and its rollout and structural flaws have already come at a steep price,” the Republican lawmakers wrote. 
While the program launched mid-season in 12 states last year for only simple returns, Republicans have continually pointed to the roughly 140,000 returns filed compared to total eligible filers.
The cost for Direct File through the pilot was $24.6 million, the IRS reported in May 2024. Direct File operational costs were an extra $2.4 million, according to the agency.
Over the past year, Republican lawmakers from both chambers have introduced legislation to halt the IRS’ free filing program. In January 2024, attorneys general from 13 states described Direct File as “unnecessary and unconstitutional” in a letter to the Treasury Department. More

The Biden administration announced on Thursday what it described as its final round of student loan forgiveness, clearing over $600 million in the debt for thousands of borrowers.
The relief will go to 4,550 borrowers entitled to debt cancellation through the Income-Based Repayment plan as well as 4,100 former students of DeVry University.

US President Joe Biden speaks during an event in Madison, Wisconsin, US, on Monday, April 8, 2024. 
Daniel Steinle | Bloomberg | Getty Images

In 2023, the Supreme Court blocked Biden’s plan to deliver wide-scale student loan forgiveness for tens of millions of borrowers.
But the Biden administration still managed to wipe away a large share of the country’s outstanding student debt by improving the Education Department’s existing debt relief programs.
“Four years ago, President Biden made a promise to fix a broken student loan system,” said U.S. Secretary of Education Miguel Cardona in a statement.
“We rolled up our sleeves and, together, we fixed existing programs that had failed to deliver the relief they promised, took bold action on behalf of borrowers who had been cheated by their institutions, and brought financial breathing room to hardworking Americans.”

Borrower IDR repayment counts adjusted

The U.S. Department of Education also announced on Thursday that it had completed its payment count adjustment for the many borrowers enrolled in income-driven repayment plans. IDR plans lead to loan forgiveness after a certain period, typically 20 or 25 years.
However, consumer advocates and borrowers had long complained that loan servicers were not properly keeping track of borrowers’ timeline to that relief. The Biden administration worked to fix this.
Borrowers should now be able to see an accurate payment count by logging into their accounts on Studentaid.gov, the Education Department said. More

If you’ve been affected by the California wildfires, you may qualify for immediate federal help.
“People impacted by these fires are going to receive a one-time payment of $770,” President Joe Biden said at a White House briefing this week.
Here’s what to know about accessing those payments or other federal aid.

Burned cars and homes destroyed by the Eaton Fire are pictured in Altadena, California, on Jan. 9, 2025.
Zoe Meyers | AFP | Getty Images

How to know if you qualify

To qualify for serious needs assistance, you need to complete a FEMA application, either by visiting DisasterAssistance.gov or calling 1-800-621-3362.
Other criteria include:

FEMA must also be able to confirm your identity.
You, or someone in your home, must be a U.S. citizen, non-citizen national or a qualified non-citizen.
You must live most of the year in the area affected by wildfires.
FEMA must confirm you have suffered disaster damage either through a home inspection or documentation.
Your application must indicate you have been displaced, need shelter or have other emergency costs.
You must apply while serious needs assistance is available.

To be sure, everyone who applies does not necessarily receive the same size payment.
 “Your unique situation determines the amount of assistance you may receive,” FEMA states on its website.

Other federal aid available

Victims of the wildfires may also qualify for other federal aid.
Another FEMA program, displacement assistance, may help cover costs for up to two weeks of housing needs if your home is uninhabitable following a disaster. That money may be used to cover costs to stay in a hotel, with friends and family or elsewhere.

Additionally, federal disaster assistance may also help cover temporary housing, grants for home repairs and essential household items, unemployment payments, low-interest loans for residential losses not covered by insurance and crisis counseling.
Disaster victims should be wary of potential scams promoting access to cash payments from FEMA, the agency warns. More

The Tax Cuts and Jobs Act of 2017, or TCJA, temporarily increased the maximum child tax credit to $2,000 from $1,000.
Without action from Congress, the higher benefit could expire after 2025.
There’s bipartisan support for the tax break, but it’s difficult to predict future legislation amid trillions in competing priorities.

Rep. Jason Smith, R-Mo., speaks during a House Oversight and Accountability Committee impeachment inquiry hearing into U.S. President Joe Biden on Sept. 28, 2023.
Jonathan Ernst | Reuters

As Congress wrestles over President-elect Donald Trump’s agenda, several key tax provisions are in limbo, including the child tax credit claimed by millions of families.  
Enacted by Trump, the Tax Cuts and Jobs Act of 2017, or TCJA, temporarily increased the maximum child tax credit to $2,000 from $1,000 per child under 17 and widened eligibility with higher-income phaseouts. But the higher benefit will revert after 2025 without action from Congress, which could impact returns filed in 2027.

“The last thing families need is to see Washington slashing their child tax credit in half,” House Ways and Means Committee Chairman Jason Smith, R-Mo., said Tuesday during a committee hearing, which repeatedly addressed the expiring tax break.
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In addition to a higher maximum benefit, TCJA capped the refundable portion of the child tax credit, which reduces the benefit for lower-income families without taxes due. 
“The child tax credit is upside down because it gives more benefits to higher-income people than lower-income people,” Chuck Marr, vice president for federal tax policy at the Center on Budget and Policy Priorities, previously told CNBC.
An estimated 17 million children under the age of 17 with lower-income parents won’t receive the full value of the child tax credit in 2025, according to a Tax Policy Center analysis released in December. 

Despite concerns over the federal budget deficit, there’s been recent support from Democrats and Republicans to extend the expiring child tax credit.
House lawmakers in January 2024 passed a bipartisan tax package, including a child tax credit expansion. The change aimed to increase access and retroactively boost the refundable portion for 2023 and could have triggered refund checks.
While Senate Republicans in August blocked legislation due to concerns about the policy, they expressed interest in future negotiations.  
But with trillions in competing priorities and a growing budget deficit, it’s unclear if lawmakers will extend the boosted child tax credit and whether the future design could change. 
The three-month fiscal year 2025 deficit ballooned to $710.9 billion in December, nearly 40% above than the same period the previous year, the U.S. Department of the Treasury reported on Tuesday.

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Select retail investors will be able to earn royalties as users of trading platform Dub duplicate their portfolios.
It’s part of a new creator program launched by the investing app.

Manusapon Kasosod | Moment | Getty Images

Dub, a platform that allows retail traders to mimic the investments of notable people in business and government, debuted a service Thursday that pays select everyday investors to share their portfolios.
Retail traders accepted into Dub’s so-called top creator program will be paid royalties for users to access their model portfolio. The creator program marks the latest push from Dub to sway mom-and-pop investors to its platform, which encourages users to forgo traditional stock picking and instead duplicate other traders’ portfolios.

“Fundamentally, we are rethinking the distribution of how capital flows to investing talent,” said Steven Wang, Dub’s founder and chief executive. “We are really at the very early innings of another retail investing revolution.”
Since its launch nearly a year ago, Dub has offered users the opportunity to track and copy the investment portfolios of people ranging from Federal Reserve Chair Jerome Powell and Rep. Nancy Pelosi, D-Calif., to billionaire hedge fund manager Bill Ackman. Users, who pay $9.99 a month or $89.99 a year, can essentially make replicas of these portfolios using their own money held in Dub’s broker dealer.
These portfolios are tracked for changes over time, with any trades automatically mirrored to others who copied them. In other words, Wang said traders can go on “auto pilot” once holding a copy of someone’s portfolio and eliminate the human error of missing any trades.
Previously, users could opt to make their portfolios available for copy by others if they met a personal investment minimum of $1,000. Now, the creator program adds a financial incentive for accepted users.
The program’s name can draw comparisons to influencer payment structures from social media platforms such as TikTok. Accepted traders get paid a scaling fee that takes into consideration several social metrics. The rate isn’t based entirely on the number of portfolio copies per creator, but that figure may be a factor.

The amount of royalties received is determined individually between Dub and each creator in the program, Wang said.
Multiple traders were already signed onto the program at the time of launch, according to Dub. Their roster includes Andrew Ver Planck, an alumnus of MacKay Shields and Putnam Investments, and Lawrence Fuller, a SeekingAlpha analyst.
Dub has a $100 minimum deposit, though some portfolios require larger investments to make a copy. The company’s broker dealer is registered with the Securities and Exchange Commission.

The ‘next generation’ of investing influencers

Dub’s program comes amid a booming period for both retail trading and the influencer economy.
Data shows that net inflows from average Joe traders to popular stocks and funds remain elevated compared with pre-pandemic levels. That’s despite the boom-and-bust cycle of day trading and meme stocks that captured America’s interest during the Covid pandemic.
At the same time, the pandemic lockdowns catalyzed a surge of interest around people with large followings on online platforms. That’s bolstered the sub-economy tied to digital creators, which Goldman Sachs estimated can swell to a $480 billion revenue opportunity by 2027. Goldman reported in 2023 that around 50 million people work as content creators around the globe.
Dub’s app has been downloaded more than 700,000 times, according to Wang. The company expects to reach 1 million before the end of the first quarter.
Looking ahead, Wang said he hopes to see the best individual traders gain followings and fortunes through the creator program and Dub’s platform. One of the benefits of Dub, he said, is the ability to see verified returns of each portfolio that can be copied before a user chooses to throw their own money behind it.
“I want the next five Warren Buffetts to be surfaced and famous on Dub,” he said. “If we’re really successful with the top creator program, the next generation of the best fund managers, the best traders in the world that people follow will rise from Dub.” More

The IRS plans to send automatic payments of up to $1,400 to 1 million taxpayers this month.
Here’s how to tell if you’re eligible and answers to other top questions.

sturti | E+ | Getty Images

As tax filing season starts, 1 million taxpayers are already set to receive automatic payments from the IRS.
That has many people asking, “Will I receive an IRS stimulus check in 2025?” “IRS automatic stimulus payments” is a breakout search, with rising queries related to eligibility, Google Trends data from Wednesday shows.

Those sums are not this year’s tax refund. Instead, the payments of up to $1,400 per individual represent Recovery Rebate Credits that were not claimed by eligible people on their 2021 tax returns.
“Looking at our internal data, we realized that one million taxpayers overlooked claiming this complex credit when they were actually eligible,” IRS Commissioner Danny Werfel said in a December statement when the automatic payments were announced.
“To minimize headaches and get this money to eligible taxpayers, we’re making these payments automatic, meaning these people will not be required to go through the extensive process of filing an amended return to receive it,” Werfel said.

Who is now eligible for a $1,400 payment?

The IRS plans to issue about $2.4 billion in automatic payments to eligible individuals who did not claim the Recovery Rebate Credit on their 2021 tax returns.
The maximum payment is $1,400 per individual, or $2,800 per married couple.

A family of four — including a married couple and two qualifying dependents claimed on their tax returns — may receive up to $5,600.
However, the payment amounts may vary, according to the IRS.
The full credit amount is available to individual taxpayers with up to $75,000 in adjusted gross income and to married couples who file jointly with up to $150,000 for 2021. The credit begins to phase out for income above those thresholds and is reduced to zero for individuals with $80,000 or more in adjusted gross income and married couples with $160,000 or more.

What do I need to do to receive an automatic payment?

If you’re eligible to receive a payment, you do not need to do anything, according to the IRS.
The payments should arrive by late January and will be direct deposited to the bank account listed on your 2023 tax return or sent by paper check to the address the IRS has on record.
Eligible taxpayers will also receive a separate letter notifying them the payment has been made.

How can I claim the money if I don’t receive a check?

Did the stimulus checks cause inflation?

Millions of Americans looked forward to the stimulus checks in the wake of the sudden Covid-19 shutdown that may have cut off their usual sources of income.
Yet following those 2020 and 2021 payments — as well as enhanced unemployment and direct child tax credit checks — inflation spiked to levels not seen in decades.
That has led some to wonder whether those stimulus efforts contributed to the inflation spike.
In a recent CNBC interview, Treasury Secretary Janet Yellen said the “spending was necessary” to help avoid the suffering of people losing their livelihoods and businesses.
“It may have contributed a little bit to the inflation,” Yellen said. “But by and large, the inflation was a supply-side phenomenon.”

The goods people wanted from China and other parts of the world faced huge supply chain problems, which pushed up prices, she said.
On Wednesday, new government inflation data showed core inflation — excluding food and energy prices — slowed in December, which helped prompt a stock market rally. Even with that progress, the Federal Reserve still has work to do to reach its 2% inflation target. More

The average end-of-year bonus rose about 2% in 2024, according to an exclusive look at data from human resource provider Gusto.
In a tight labor market, employers often use bonuses as a tool to keep their top performers engaged.
But workers increasingly value other perks as well, separate studies show, particularly when it comes to flexible hours and work-life balance.

After a prolonged period of job gains and wage increases, employers capped off the year by giving their employees bigger year-end bonuses, a new report found.
The average bonus awarded in December was $2,503, on average, up from $2,447 in 2023 — an increase of just over 2%, according to an exclusive look at data from human resource provider Gusto, based on more than 400,000 small- to medium-sized businesses nationwide.

“The average represents about one paycheck. That turns into a pretty significant amount of money especially at the end of the year,” said Gusto’s senior economist, Nich Tremper.
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“This is an economy that ended 2024 much better than expected and small businesses are taking advantage of that — that includes wages and compensation for the current employees,” Tremper said.

Sectors that saw bigger, or smaller, bonuses

But bonuses also varied by industry, Gusto found: The average end-of-year bonus increased significantly among several white-collar industries, including communications, technology and professional services.  
Adam Beasley, owner of Adam Up Accounting firm in Payson, Utah, said he determines bonuses for his staff based on the prior year’s profitability. “We were up another 8% in 2024, so the bonus was bigger.”

Beasley, who does accounting work for other small business owners, said he feels even more optimistic about 2025. “I take care of a lot of blue-collar companies — plumbers, electricians, guys putting in infrastructure — and a lot of them are doing well because there’s still a lot of work to get done.”
Meanwhile, many service industry workers saw smaller end-of-year bonuses in 2024 compared with the end of 2023, Gusto found. Sectors such as transportation and warehousing faced reduced demand, leading to significant declines in year-end bonuses for workers in these trades, according to Tremper.

Overall, the jobs market remained remarkably strong throughout 2024, other reports show. Employment grew each month and, as of the latest reading, the unemployment rate edged down to 4.1% in December. Average hourly earnings also increased 0.3% last month.
In a tight labor market, some employers use bonuses as a tool to keep their top performers engaged, with fewer companies paying out bonuses to the entire staff, Tremper said. The share of workers receiving a bonus declined in 2024 by almost 2% compared with 2023.

Money is key, but so is work-life balance

“The key thing is that companies need to remain competitive,” said Michelle Reisdorf, district president at Robert Half, a recruitment and staffing firm. “Bonuses are that extra perk that employees look for when deciding whether to stay in a job or look for a new job.”
According to Robert Half’s survey of more than 1,600 hiring managers in November, 62% of managers said bonuses were higher in 2024 compared with the year before and 28% offered bonuses in line with 2023. Only about 5% of managers said bonuses were smaller than they were previously.
For workers, “money always ranks near the top in perks,” Reisdorf said. However, priorities have also shifted, largely since the pandemic. These days, employees are more likely to consider work-life balance, flexible hours and mental health support as equally important.
To that end, workers increasingly value flexible or hybrid work schedules, extra paid days off, additional options for health insurance or more robust retirement saving plans, Reisdorf said: “The key one is flexibility.”
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