Conviction / Uncrewed Platforms
RCAT
Red Cat Holdings
conviction · held at 6.4%
Red Cat makes the Black Widow reconnaissance drone the US Army selected for its squad level program, and the Army has signalled it intends to buy nearly 6,000 systems over five years, with orders now also arriving from Japan and NATO. Revenue is growing very fast from a small base, but the share price already assumes full rate production succeeds and the company has repeatedly raised money by issuing new shares.
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 | $8.85 |
| 30-day move | -4.1% |
| Position in 52-week range | 24 |
| From the 52-week high | -52.8% |
| Average daily volume | $79.5M |
| Weight in the book | 6.4% |
| Since last rebalance | -22.6% |
Why it is in the fund
Thesis
Teal Drones military quadcopter selected for SRR program; pure-play on small tactical UAS for infantry.
Standing judgment
At $8.85 the stock is 53% off its high in the 24th percentile of its range, but $1.17B-$1.26B of market capitalisation against a $150M-$180M targeted run rate already prices successful full-rate execution. Roughly 21% short interest, a pending executive lawsuit and a repeated pattern of dilutive raises sit on top of a thin float, so this is a real liquidity constraint for a copy-traded book and the position should be sized well inside the 25x average-daily-volume rule.
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 | 72 | +6 | The Army's stated intent to buy 5,880 Black Widow systems plus international orders moves this from a single-program bet to a scaling franchise, but multi-sourcing, litigation and dilution history keep it in the lower half of the strong band. | Incumbent on the US Army Short Range Reconnaissance program of record with a $35M TD3 and LRIP contract, against an Army five-year SRR program sized near $5.88B starting with 5,880 systems; Japan Ground Self-Defense Force order and a NATO Black Widow deal; production capacity increased 520%; maritim |
| 2026-08-05 | 66 | flat | first v3 judgment (v2 score was uninformative, see L-001): Revenue is compounding off a program-of-record base and international orders are validating the platform, but the valuation, the dilution track record, and the Pentagon's own admission of a domestic production shortfall cap the forward return below the buy bar. | Q1 2026 revenue $15.5M, up 849 percent year over year, with gross margin up 64.8 points year over year, driven by SRR deliveries. FY2025 revenue $40.7M, up 161 percent, with production capacity increased 520 percent. Army SRR program has a $5.88B five-year ceiling starting with 5,880 Black Widow sys |
| 2026-08-05 | 66 | flat | first v3 judgment (v2 score was uninformative, see L-001): Revenue is compounding off a program-of-record base and international orders are validating the platform, but the valuation, the dilution track record, and the Pentagon's own admission of a domestic production shortfall cap the forward return below the buy bar. | Q1 2026 revenue $15.5M, up 849 percent year over year, with gross margin up 64.8 points year over year, driven by SRR deliveries. FY2025 revenue $40.7M, up 161 percent, with production capacity increased 520 percent. Army SRR program has a $5.88B five-year ceiling starting with 5,880 Black Widow sys |
| 2026-08-05 | 66 | -27 | first v3 judgment (v2 score was uninformative, see L-001): Revenue is compounding off a program-of-record base and international orders are validating the platform, but the valuation, the dilution track record, and the Pentagon's own admission of a domestic production shortfall cap the forward return below the buy bar. | Q1 2026 revenue $15.5M, up 849 percent year over year, with gross margin up 64.8 points year over year, driven by SRR deliveries. FY2025 revenue $40.7M, up 161 percent, with production capacity increased 520 percent. Army SRR program has a $5.88B five-year ceiling starting with 5,880 Black Widow sys |
| 2026-07-29 | 93 | +8 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-24 | 85 | -4 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-21 | 89 | -1 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-20 | 90 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-08 | 90 | -3 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-07-07 | 93 | +1 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-21 | 92 | +2 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-20 | 90 | -1 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-19 | 91 | -1 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-19 | 92 | +3 | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-12 | 89 | flat | migrated from v2 (cause not recorded) | v2 `scores` row |
| 2026-06-12 | 89 | +1 | migrated from v2 (cause not recorded) | v2 `scores` row |