Our Small-Cap Holding Makes $205 Million Acquisition
Plus, we’re buying more shares of these two names.
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On Monday morning, news broke that portfolio holding Ondas Inc (ONDS) had acquired privately held GATE Technologies. GATE Technologies is an Israeli-based defense technology contractor specializing in electronic safe and arm devices and advanced electronic fuzing technologies used across high-end precision weaponry as well as autonomous strike systems.
Ondas will also acquire Bron Technologies. Bron Technologies is a Poland-headquartered manufacturing and certification company. Bron is an affiliated company whose businesses are integrated with GATE’s systems. Ondas will pay $205 million, the majority in cash, plus a working capital adjustment in addition to up to $185 million worth of performance-based earn-out considerations. The earn-out payment will be tied to financial targets through 2028 and may be paid in cash or ONDS common stock.
Ondas expects these acquired businesses to contribute more than $130 million of aggregate Adjusted EBITDA through 2028. Ondas also expects GATE to produce $65 million in revenue for 2026, increasing up to $180 million by 2028 with a strong margin profile. Under the terms of the transaction, Ondas will pay $205 million, consisting of $105 million in cash and $100 million in common stock. Approximately $22.5 million of the working capital adjustment will be issued in stock within nine months of closing. Yes, this would be dilutive. The stock is acting this morning as if it had already priced in something more dilutive.
CEO Commentary
Chairman and CEO Eric Brock of Ondas commented on the deal:
“ESAD (Electronic Safe & Arm Devices) components are in tight supply today, and qualified production capacity is a bottleneck for the entire precision-strike supply chain. GATE has earned the trust of a broad base of defense OEMs and weapon programs around the world, and that customer base comes first. Ondas is committed to serving the entire market with low-cost, advanced fuzing capabilities, and we will invest in GATE’s capacity, engineering and global reach so it can support more customers and more programs.”
Wall Street
In response to this deal, analyst Max Michaelis of Lake Street reiterated his “Buy” rating on ONDS as well as his target price of $19. Michaelis is rated at four stars out of five at TipRanks. Over the past two years, he has compiled just a 44% success rate but has generated an average return of 25.5%.
Trading
Good thing the portfolio scoped up a little ONDS on Friday at lower prices. The portfolio got quite a bit done on Friday, save the Rocket Lab (RKLB) addition, which we missed on. On Monday, we’re going to continue to drain the long position in Alto Ingredients and cancel the target price. I am pretty sure that the portfolio is leaving that name. We’ll also take the long position in Planet Labs (PL) up to a round lot by adding another ten shares at these prices.
Friday’s Intentions vs Actual Trades
Intention: Sell 25 shares of (ALTO) at or close to the last sale of $4.04
Actual trade: Sold 25 shares of ALTO at $3.91
Intention: Sell 15 shares of (VELO) at or close to the last sale of $10.81
Actual trade: Sold 15 shares of (VELO) at $10.18
Intention: Purchase 25 shares of (ONDS) at or a limit price of $7.20 or better
Actual trade: Bought 25 shares of ONDS at $7.05
Intention: Purchase 10 shares of PL at a limit price of $16.80 or better
Actual trade: Bought 10 shares of PL at $16.12
Intention: Purchase 2 shares of RKLB at a limit price of $61 or better
Actual trade: Nothing done
Intention: Purchase 10 shares of (SOFI) at a limit price of $17.10 or better
Actual trade: Bought 10 shares of SOFI at $17.02
Monday’s Intentions
Sell 25 shares of ALTO at or close to the last sale of $3.98
Purchase 10 shares of PL at a limit price of $16.40 or better
Current Positions
Long 75 shares of ALTO at $4.4667. Target price: $6.50. Last sale: $3.98.
Long 60 shares of (ASPN) at $5.1083. Target price: $10. Last sale: $4.83.
Long 100 shares of (EVLV) at $5.7883. Target price: $8.50. Last sale: $5.01.
Long 100 shares of (OCUL) at $8.3545. Target price: $11. Last sale: $10.65.
Short one OCUL $11 September 18 call at $1.65. Last sale: $0.25.
Long 250 shares of ONDS at $8.0932. Target price: $12. Last sale: $7.33.
Long 90 shares of PL at $20.8019. Target price: $33. Last sale: $16.21.
Long 35 shares of (PTON) at $5.1236. Target price: $9. Last sale: $4.96.
Long 5 shares of (RKLB) at $77.936. Target price: $97. Last sale: $62.40.
Long 120 shares of SOFI at $16.0609. Target price: $24. Last sale: $17.29.
Short one SOFI $22 November 19 call at $1.20. Last sale: $0.45.
Long 50 shares of (SWBI) at $14.0414. Target price: $19. Last sale: $12.97.
Long 70 shares of (VELO) at $11.3871. Target price: $18. Last sale: $10.02.
Cash: $306.13.
Portfolio value: $9,583.22, -4.2% from inception on March 24.
At the time of publication, Guilfoyle was long ALTO, ASPN, EVLV, OCUL, ONDS, PL, PTON, RKLB, SOFI, SWBI and VELO.
