Conviction / Uncrewed Platforms
KTOS
Kratos Defense & Security Solutions
conviction · held at 9.7%
Kratos builds jet powered drones cheap enough for the military to treat as expendable, and the Marine Corps has now selected its Valkyrie aircraft through a partnership with Northrop Grumman. Revenue grew 30 percent last quarter and the 2027 budget request would raise funding for autonomous systems from a few hundred million dollars to more than 50 billion, while the stock still trades well below its high.
What we judge
The view on expected return from here, 0 to 100.
Whether the thesis could succeed without this company at all. This moves slowly, and only when the company's position genuinely changes.
What we measure
Facts from market data, not judgments.
| Price | $55.00 |
| 30-day move | +9.3% |
| Position in 52-week range | 13 |
| From the 52-week high | -59.0% |
| Average daily volume | $271.1M |
| Weight in the book | 9.7% |
| Since last rebalance | +1.5% |
Why it is in the fund
Thesis
Valkyrie loyal-wingman and Mako attritable drone programs position Kratos as the pure-play on CCA and attritable autonomous aircraft.
Standing judgment
At $55.00 the stock is 59% off its high and in the 13th percentile of its range while revenue grows 30%, which is the widest structural-versus-price gap in the book. Roughly 5x 2026 sales is cheaper but not cheap, and DoD award timing makes quarters lumpy, so size it for volatility rather than for certainty.
What changed, and why
Every move in this number carries the reason it moved. A score does not change without new evidence.
| Date | Conviction | Change | Cause | Evidence |
|---|---|---|---|---|
| 2026-08-05 | 91 | +9 | The only name in the fund where all three legs are satisfied at once: it owns the attritable jet layer, Q2 accelerated across every metric, and the stock still sits in the bottom eighth of its 52-week range. | Q2 2026 revenue $458.8M up 30.5% y/y with 19.1% organic growth, bookings $492.2M, consolidated backlog $2.084B against a $15B proposal pipeline, and 2026 organic growth guidance raised to 18-23%. Marine Corps MUX TACAIR CCA awarded to Northrop with Kratos XQ-58 Valkyrie as the air vehicle, 15-20 Val |
| 2026-08-05 | 82 | flat | first v3 judgment (v2 score was uninformative, see L-001): Valkyrie is transitioning from prototype to serial production with a named service customer and a competitively awarded prime pulling it through, while the classified Poseidon win adds multi-year visibility the market is not paying for at the current derated multiple. | Q2 2026 double beat with roughly 30 percent revenue growth; FY2026 guidance raised to $1.750B to $1.810B (18 to 23 percent organic growth). Record backlog $1.573B and a record $13.7B opportunity pipeline. CEO DeMarco guided to 15 to 20 Valkyrie deliveries in 2026 with annual production scaling from |
| 2026-08-05 | 82 | flat | first v3 judgment (v2 score was uninformative, see L-001): Valkyrie is transitioning from prototype to serial production with a named service customer and a competitively awarded prime pulling it through, while the classified Poseidon win adds multi-year visibility the market is not paying for at the current derated multiple. | Q2 2026 double beat with roughly 30 percent revenue growth; FY2026 guidance raised to $1.750B to $1.810B (18 to 23 percent organic growth). Record backlog $1.573B and a record $13.7B opportunity pipeline. CEO DeMarco guided to 15 to 20 Valkyrie deliveries in 2026 with annual production scaling from |
| 2026-08-05 | 82 | -16 | first v3 judgment (v2 score was uninformative, see L-001): Valkyrie is transitioning from prototype to serial production with a named service customer and a competitively awarded prime pulling it through, while the classified Poseidon win adds multi-year visibility the market is not paying for at the current derated multiple. | Q2 2026 double beat with roughly 30 percent revenue growth; FY2026 guidance raised to $1.750B to $1.810B (18 to 23 percent organic growth). Record backlog $1.573B and a record $13.7B opportunity pipeline. CEO DeMarco guided to 15 to 20 Valkyrie deliveries in 2026 with annual production scaling from |
| 2026-07-29 | 98 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-24 | 98 | -1 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-21 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-20 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-08 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-07 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-21 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-20 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-19 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-19 | 99 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-12 | 99 | +2 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-12 | 97 | -1 | migrated from v2 (cause not recorded) | v2 `scores` row |