Cedar Grove's Paul Cerro on what makes $RCAT drones unique + odds for winning SRR contract

Aug 27, 2024

Paul Cerro, CIO of Cedar Grove Capital Management, dives into the world of Red Cat Holdings, a standout in drone technology. He highlights RCAT's unique offerings for military and government use, discussing their competitive edge in this evolving market. Cerro also explains the significance of the SRR contract and the odds of RCAT winning it, revealing insights on market expectations and potential economic impacts. Through his analysis, listeners gain a deeper understanding of investment risks and opportunities within the defense drone sector.

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Intro

00:00 • 2min

The Drone Revolution in Military Strategy

01:51 • 19min

Exploring the Significance of the SRR Contract for Unmanned Drones

20:29 • 2min

Drones, Contracts, and Market Dynamics

22:49 • 22min

Navigating the Competitive Drone Contract Landscape

44:30 • 4min

Redcat's Drone Innovations and Strategic Military Insights

48:20 • 2min

Understanding Investment Risks in the Defense Drone Sector

50:13 • 2min

Paul Cerro, CIO of Cedar Grove Capital Management, joins the podcast to discuss his thesis on Red Cat Holdings (NASDAQ: RCAT), a drone technology company integrating robotic hardware and software for military, government, and commercial operations.

Cedar Grove RCAT thesis: https://www.cedargrovecm.com/p/red-cat-rcat-trade-worth-up-to-200-prcnt Chapters:

[0:00] Introduction + Episode sponsor: Ycharts

[2:28] What is Red Cat $RCAT and why are they so interesting to Paul

[6:26] Why is $RCAT relevant in the drone market? What is unique about $RCAT drones?

[13:29] Capabilities of $RCAT drones and how much they are selling them for (to the military) / what specifically going on with $RCAT drone that US Government is using them vs. going with commercial drone

[21:21] What is the SRR Contract and why is this a big deal

[25:40] Odds that $RCAT wins this SRR contract

[30:00] Economics if $RCAT wins the contract / what margins would look like

[33:12] Valuation: market already baking in best-case scenario in terms of them winning?

[36:17] What does the company look like if they don't win the contract / how much is Paul's bet on $RCAT winning the SRR contract vs. betting on Red Cat in particular

[40:05] Are the odds in the stock price right now that they win this contract vs. what Paul thinks the odds are that they win this contract / in Paul's opinion, what he thinks the market is missing

[45:22] Is there correlation between the NATO contract and SRR contract?

[50:39] Final thoughts

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