Our Small-Cap Drone Holding Gets a Boost From the White House
A new proclamation from President Donald Trump could be big for domestic drone firms.
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On Friday, the White House announced that President Donald Trump signed a proclamation to “address the national security threat posed by imports of drones and their components.”
A released fact sheet stated:
“The Proclamation imposes a 100% ad valorem tariff on drones of a certain size or with certain capabilities that are particularly sensitive for national security purposes, docking stations of these drones, and certain critical components of these drones. This drone category includes drones with a maximum takeoff weight of more than 25 kilograms and drones with thermal imaging capabilities. The Proclamation imposes a 25% ad valorem tariff on certain drones that are smaller in size and lack certain capabilities that particularly implicate national security, and on other drone components. The Proclamation imposes a 15% ad valorem tariff on drones and components from the European Union, Japan, Liechtenstein, Republic of Korea, Switzerland, and Taiwan, and a 10% ad valorem tariff for drones from the United Kingdom, provided that substantially all hardware, software, and technology originates from within these countries and the United States.”
In addition, “The Proclamation authorizes the Secretary of Commerce to establish an onshoring program for companies making new investments in manufacturing drones and drone components. The tariffs will take effect 21 days after signing. For components of drones that are not particularly sensitive, the tariffs will take effect 180 days after signing. For products and components that the Department of War has approved for an exemption from the Federal Communications Commission’s Covered List within 20 days of signing, the tariffs will take effect 180 days after signing.”
This is an obvious market positive in the portfolio’s opinion for Ondas Inc (ONDS) as well as other U.S.-based drone designers and manufacturers. Other names that come to mind would be AeroVironment (AVAV), Kratos Defense (KTOS), Red Cat Holdings (RCAT), Boeing (BA) and Northrop Grumman (NOC). On Friday, six different sell-side analysts either reiterated or initiated “buy” ratings on ONDS with an average target price of $19.17.
Other Portfolio News
Evolv Technologies (EVLV)
Last week, analyst Shaul Eyal of TD Cowen reiterated his “buy” rating on EVLV as well as his $10 target price. Eyal is rated at five stars out of five by TipRanks. He has compiled a 60% success rate over the past two years while generating an average return of 29.8%.
Last week, analyst Jeremy Hamblin of Traig-Hallum reiterated his “buy” rating on EVLV as well as his $11.25 target price. Hamblin is rated at five stars out of five by TipRanks. He has compiled a 51% success rate over the past two years while generating an average return of 16.7%.
Last week, analyst Michael Latimore of Northland Securities reiterated his “buy” rating on EVLV as well as his $10 target price. Latimore is rated at four stars out of five by TipRanks. He has compiled a 43% success rate over the past two years but has generated an average return of 23.2%.
Rocket Lab (RKLB)
On Sunday, portfolio holding Rocket Lab (RKLB) announced the successful launch of eight advanced satellite platforms the Company had built for MDA Space (MDA), which is the prime contractor for the replenishment of Globalstar’s (GSAT) existing constellation. Globalstar provides direct-to-device communications services and IoT applications from orbit.
SoFi Technologies (SOFI)
On Monday morning, analyst Patrick Moley of Piper Sandler reiterated his “buy” rating on SOFI as well as his $22 target price. Moley is rated at five stars out of five by TipRanks. He has compiled a 72% success rate over the past two years but has generated an average return of 41.1%.
Last week, analyst Manyi Lu of DBS reiterated his “buy” rating on SOFI as well as his $28 target price. Lu is rated at five stars out of five by TipRanks. He has compiled a 76% success rate over the past two years but has generated an average return of 28%.
Last week, analyst Matthew Coad of Truist Financial reiterated his “hold” rating on SOFI, while increasing his target price from $18 to $19. Coad is rated at two stars out of five by TipRanks. He has compiled a 60% success rate over the past two years but has only generated an average return of 1.5%.
Velo3D (VELO)
Last week, analyst Tory Jensen of Cantor Fitzgerald reiterated his “buy” rating on VELO, along with his $17 target price. Jensen is rated at four stars out of five by TipRanks. He has compiled a 61% success rate over the past two years while generating an average return of 17.6%.
Last week, analyst Greg Palm of Craig-Hallum reiterated his “buy” rating on VELO, while increasing his target price from $20 to $23. Palm is rated at five stars out of five by TipRanks. He has compiled a 62% success rate over the past two years while generating an average return of 36.1%.
Friday’s Intention vs Actual Trade
Intention: Purchase 5 shares of EVLV at or close to the last sale of $5.78.
Actual trade: Bought 5 shares of EVLV at $5.75.
Monday’s Intentions
With Ocular Therapeutix trading above the portfolio’s $11 target price on Monday morning, the intent is to sell the portion that the portfolio has not sold a covered call against:
Sell 15 shares of OCUL at or close to the last sale of $11.39.
Current Positions
Long 300 shares of (ALTO) at $5.0782. Target price: $8. Last sale: $4.16.
Long 85 shares of EVLV at $5.8876. Target price: $8.50. Last sale: $6.00.
Long 115 shares of OCUL at $8.3545. Target price: $11. Last sale: $11.39.
Short one OCUL $11 September 18 call at $1.65, Last sale: $1.15.
Long 275 shares of ONDS at $8.491. Target price: $14. Last sale: $9.18.
Long 50 shares of (PL) at $24.4758. Target price: $46. Last sale: $24.96.
Long 8 shares of RKLB at $71.4888. Target price: $101. Last sale: $80.30.
Long 100 shares of SOFI at $15.7153. Target price: $24. Last sale: $18.69.
Long 50 shares of (SWBI) at $15.2614. Target price: $19. Last sale: $14.33.
Long 100 shares of VELO at $12.2986. Target price: $21. Last sale: $16.45.
Cash: $22.70.
Portfolio Value: $11,578.07, +15.8% from inception on March 24.
