# Let's invest in Unmanned Aerial Vehicles



## bflannel (Apr 21, 2013)

I searched and couldn't find a post about this business segment.

I've been following the space for a couple of years as my interest in drone manufacturers grew, and without access to JDI, I went on a search. You'll quickly find different UAV markets. I'm not interested in retail. I think tactical and commercial applications are the future. I watched from the sidelines as AVAV piqued >$110 in 2018 and then fell sharply on margin contraction concerns and cash flow difficulties. They exited the EV market with a sale of their Energy Efficiency Systems division to EV Solutions. This focused operations on Unmanned Aerial Vehicles and defence contracting. 

The companies I know about that fit in pure are:
AVAV
KTOS

But of course, we have the literal big guns: Raytheon, General Dynamics, Lockheed Martin, Northrop Grumman. Any more?

During the recent September correction, I bought in a partial position in AVAV, and it's continued to trend up on improved earnings estimates, among other rising tides. I'm interested in putting some more money to work in this space but thought we could all benefit from an organized discussion on some of these companies.

Do we expect to see more wartime requirements as a trend? It seems we've passed the ethics debate of using drone surveillance and warfare tactics. It also seems we are deep in a nation-state defence run on technological dominance.

I see AVAV as the safer bet through the next five years but do we have any industry experts or other possibly more informed retail investors on this site?

Cheers,

BF


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## MrMatt (Dec 21, 2011)

It's a commodity technology these days, at least in military terms.

The urban delivery drones are like self driving cars, not there yet, might be some first mover.


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## jargey3000 (Jan 25, 2011)

aerial vehicle's what?
or, do you mean aerial vehicles?


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## james4beach (Nov 15, 2012)

Disclosure: I used to be employed in this area. They were going to make me rich. I quit because of ethical concerns.

The problem is that although it seems like military technologies would only be used for defence, or for legitimate and LEGAL operations, they are actually used far more broadly including in some real grey areas and illegal uses - which violate both domestic and international law.

(If you get a chance, watch the documentary: National Bird)

This includes usage even on civilians (well documented) and your own citizens (reference). Speaking about the defence contractors and weapons makers, this includes: surveillance, suppression of the population, and even execution (murder) of people. I find that totally unacceptable.

Do you want to invest in companies which develop weapons and technologies that are used, illegally, to violate the rights of other people -- including citizens? Or that are sold to foreign regimes which then use them to abuse and murder people? That's what you get if you invest in these companies. An engineer at one of these drone makers once told me, proudly, that he had improved the optical systems that helped them "blow up brown people from high altitude". Almost an exact quote, first hand conversation with an engineer.

These companies are staffed by warmongers. Some of their designers, managers, and engineers hold vile opinions about the need to kill others. Again, this is first hand experience: talking with them, meeting with them, having lunches, etc. There were times I lost my appetite and even sharing this is causing me stress.

The very existence of these companies, and their success, helps _drive_ warfare and conflict around the world. This is important to realize. The companies don't just exist in reaction to warfare and violence. Their existence, and the lobbying pressure they exert, _helps to drive warfare and violence_.

Another important point is that drone technologies have been misused so terribly in foreign countries that *drones are helping breed anger against Americans/Canadians/Europeans*. Drones are inspiring new terrorists who will seek revenge. So in my opinion, these technologies are compromising our own safety and well being.

If you become an owner of these companies, then you have responsibility for the unethical things they do, the violations of law, and the warfare and violence they cause. You are partly responsible for the new terrorists they are creating. There will be blood on your hands.

Military technologies and weapons are already used on Americans domestically, on American soil. If these kinds of investments interest you, then also take a look at a related thread: Investing in the police state


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## MrMatt (Dec 21, 2011)

james4beach said:


> If you become an owner of these companies, then you have responsibility for the unethical things they do, the violations of law, and the warfare and violence they cause. You are partly responsible for the new terrorists they are creating. There will be blood on your hands.


No, when something has both an ethical use and an unethical use, you are not always responsible.

We have laws and rules for how these devices are to be used, if people break them, that's on them.
It's not the alcohol companies fault someone drives drunk.

It's one thing if you actively vote for leadership that pushes the illegal and immoral use.

If you're a citizen of a country, you're not necessarily responsible for the unethical acts of your government leadership.
If they act unethically, and you vote to keep them in power, you are partially responsible.

That being said, there are bad people out there, and if the decision to attack them is made, we should do it in the safest and most efficient way we can.
Drone strikes are almost too easy, we can keep our troops safer, and due to the lower risk we can wait to minimize collateral damage.


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## james4beach (Nov 15, 2012)

MrMatt said:


> That being said, there are bad people out there, and if the decision to attack them is made, we should do it in the safest and most efficient way we can.
> Drone strikes are almost too easy, we can keep our troops safer, and due to the lower risk we can wait to minimize collateral damage.


It's both easy and fun, like playing a video game from the comfort of your home!

Gosh with the kind of safety and efficiency you speak about, it must leave the people of Iraq, Syria, Afghanistan, Pakistan, Yemen with really warm & fuzzy feelings.

Maybe they will come and thank you for being so efficient, and so careful about accidentally massacring civilians?


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## MrMatt (Dec 21, 2011)

james4beach said:


> It's both easy and fun, like playing a video game from the comfort of your home!
> 
> Gosh with the kind of safety and efficiency you speak about, it must leave the people of Iraq, Syria, Afghanistan, Pakistan, Yemen with really warm & fuzzy feelings.
> 
> Maybe they will come and thank you for being so efficient, and so careful about accidentally massacring civilians?


It's safer then sending a squad in to do the attack.
They can't just sit there waiting for days for the most opportune time, with lowest risk of collateral damage.

No I don't think they'd be thankful, Just that using drones is safer.

It's like supervised injection sites, or prescription heroin. Still bad, just less bad.


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## sags (May 15, 2010)

Unfortunately, technology that temporarily gives the "good guys" the upper hand, soon falls into the "bad guys" hands.

Other countries have developed drones, and the drug cartels are using drones to deliver drugs into the US. 

Private citizens flying drones have become an increasing danger to air travel.

The next technology may be protection "from" drones..........and the military spending goes on and on.


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## MrMatt (Dec 21, 2011)

sags said:


> Unfortunately, technology that temporarily gives the "good guys" the upper hand, soon falls into the "bad guys" hands.
> 
> Other countries have developed drones, and the drug cartels are using drones to deliver drugs into the US.
> 
> ...


Yes, you've articulated the problem (which we all know about).
So what is your solution?

Self flying drones and self driving cars exist outside the military.
What happens when someone loads a Tesla up with a car bom? Is that Teslas fault?

I don't have a perfect solution, but I think we should ensure we have good laws, and demand they be followed and enforced.


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## bflannel (Apr 21, 2013)

jargey3000 said:


> aerial vehicle's what?
> or, do you mean aerial vehicles?


Thank you 😂


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## bflannel (Apr 21, 2013)

With the ethics conversation now out there with excellent input (as always) from @james4beach and some good banter between others, I'd say it's safe to assume we collectively believe it's important to consider the implications of harm in the companies we hold equity in. UAV/Defense sector companies are a far cry from an ESG play, and after years of knowing and considering sin/vice funds _and seeing that they really haven't faired well_ - maybe it's not such a trend to get on, but surely there's more to 2021 life than renewables? I'm at my gills with RRSP stalwarts. I was fortunate enough to ride tesla for a ten-bagger in the TFSA, and now without buying QQQ to get my jollies I think there's an interesting story here that will not go away in my lifetime.

If you wanted to remain on the buy side, here's an interview with an executive at AVAV. On pricing, he mentioned, "it's a very competitive space," well ya. Still, it seems like they have first to market advantage and good organic incubation for innovation and modularity & differentiation between product lines. 

Any intel on the approval of selling switchblade and other products to select consumers internationally or competitors otherwise not mentioned?

Would you be more apt at purchasing to hold in the largest defence contractors, say a Raytheon versus one of these smaller fries? 

And because we might as well. How would a Biden win influence US defence spending, and in your opinions, would this be a program that gets cut?


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## Spudd (Oct 11, 2011)

Pure gut feel, but I think regardless of who wins, it would make sense to increase spending on UAV's because they're cheaper to operate and don't put American lives at risk.


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## bflannel (Apr 21, 2013)

The global unmanned helicopter market size is expected to hit USD 11,382.8 million by 2027 while exhibiting a CAGR of 12.52% between 2020 and 2027. This is attributable to the increasing demand for this helicopter in commercial applications and the growing adoption of advanced technology such as internet of things (IoT) in the development of the product across the globe. This information is published by Fortune Business Insights in its latest report, titled, "Unmanned Helicopter Market Size, Share & COVID-19 Impact Analysis, By Product (Small (0-20 lbs), and Medium (21-55 lbs)), By Application (Military [ISR, Combat, Search & Rescue, Transportation, Naval Support, and Border Support], Government Agency [Planning, Inspection, Surveying, Public Safety, and Search & Rescue], Industrial [Planning, Inspection, Surveying]), and Regional Forecast, 2020-2027." The report further mentions that the market stood at USD 5,092.3 million in 2019.

Defense Budget Cuts amid COVID-19 to Restrain Market Growth

The huge economic loss owing to the novel coronavirus that has severely strained the healthcare service globally has affected the overall growth of the regions. Owing to this, several countries are contemplating a reduction in their defense budgets to neutralize the loss to some extent. Additionally, remarkable reduction in investments and less business opportunities is expected to hamper the growth prospects in the near future.

List of the Leading Companies Profiled in the Global Unmanned Helicopter Market are:

-- VELOS ROTORS LLC (U.S.)

-- AeroVironment Inc. (U.S.)

-- Flint Hills Solutions (U.S.)

-- Laflamme Aero Inc. (Canada)

-- Steadicopter (Israel)

-- CybAero AB (Sweden)

-- Alpha Unmanned Systems (Spain)

-- Schiebel Corporation(Austria)

-- HELIPSE (France)

-- Aeroscout GmbH (Switzerland)

-- HighEye (The Netherlands)

-- Anduril (U.S.)

-- Aeryon/FLIR (U.S.)

-- Quantum (Germany)

-- Northrop Grumman(U.S.)

-- UMS Skeldar (Switzerland)


DRIVING FACTORS

Increasing Adoption of Unmanned Helicopter for Commercial Applications to Augment Growth

The growing technological advancement is propelling the manufacturers to develop sophisticated UAV products by adopting the internet of things (IoT) and artificial intelligence (AI). These advanced unmanned products are being widely adopted for industrial applications such as infrastructure inspection, forest monitoring, and photogrammetric survey. For instance, in April 2020, UAVOS Inc successfully commenced an automated flight test with its UVH-170 cargo delivery unmanned helicopter that involved a vendor and destination and back. Such initiatives by the companies are further expected to boost the growth of the global unmanned helicopter market in the forthcoming years.

SEGMENTATION

Small Segment Held 40.5% Market Share in 2019

The small segment held a market share of about 40.5% in 2019 and is expected to gain momentum owing to the growing air transport applications such as logistics, cargo, and others that drive the demand for advanced UAV products across the globe.

REGIONAL INSIGHTS

Presence of Established Air Transport Solution Companies in North America to Favor Growth

Among the regions, the market in North America is expected to remain dominant and hold the highest position in the global unmanned helicopter market in the forthcoming years. This dominance is attributable to the presence of large companies such as Uber, DHL, UPS, and Zipline that are focusing on providing efficient air transportation and logistics solutions in the region. The region stood at USD 1,737.7 million in 2019.

The market in Europe is expected to showcase significant growth owing to the increasing demand for these helicopters for defense services such as naval, border patrolling, and security in the region between 2020 and 2027.

COMPETITIVE LANDSCAPE

Major Companies Focus on Product Innovations to Boost Their Sales Revenue

The global unmanned helicopter market is experiencing fierce competition as the major companies are engaged in activities such as product innovations to gain a competitive edge over their rivals. The high investments in R&D activities to develop innovative unmanned helicopters by key players are further expected to bode well for the growth of the market.

Industrial Development:

April 2020 - AeroVironment, Inc introduced QUANTIX RECON, a complete automated hybrid Vertical Take-off and Landing (VTOL) aircraft system specially designed for defense applications. The high-resolution imagery and total automated reconnaissance solutions are expected to amplify its position in the global marketplace.


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## Juggernaut92 (Aug 9, 2020)

This is a very interesting discussion. UAVs definitely bring lots of value by avoiding risking human lives.


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## gardner (Feb 13, 2014)

Some of them (eg: predator) use Rotax (BRP) engines. It's a relatively small slice of BRPs business, but it's there.


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## bflannel (Apr 21, 2013)

Risen 30% since first authoring this post. Every conversation and news piece seems to go in the way of a positive market trend, a good return on research & development expenditure, and product differentiation among an expansion of the customer base. So I've added 50% more.


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## bflannel (Apr 21, 2013)

AVAV to a new all time high of $122 on news of inclusion in further robotics and automation ETF's including ARKX.


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