I talk a lot about time frames. There's a simple explanation: they matter. In fact, they may be the most important deciding factor in not only what you trade but how you trade it. Where is your opportunity?
Let's take a look at Draganfly (DFLYF) . This is a small drone company trading on the OTC. Honestly, that's oversimplifying it. Draganfly's business touches way more than drones in the traditional sense. Yes, it recently secured a new drone delivery patent for a vertical take-off and landing cargo delivery drone with variable center of gravity, so there still exists plenty of upside in the traditional sense. The timeframe on this will be longer though as drone delivery won't be on our doorstep, no pun intended, for months, if not years.
On the traditional front, it doesn't hurt that the U.S. Department of Agriculture selected Draganfly's Commander Ag-Pro drone for phenotyping, data collection, and data analysis.
But many don't realize this company is a backdoor play on Covid-19. The company has partnered with Varigard for Covid-19 disinfecting solutions. We've already seen Alabama State University and Battlefield Fight League (streaming partner of UFC) employ the use of drones plus disinfectant to help open up the world of sports again. The Alabama State Senate is also taking delivery of the Draganfly Vital Intelligence Smart Vital system which monitors (with voluntary consent) vital signs like temperature, heart rate, breathing rate, and blood oxygen content.
We're seeing new deals signed pretty much on a weekly basis right now.
But what if I told you that you could buy Draganfly shares for $0.47 right now and get a warrant to buy more shares at $0.71 as well. With shares trading north of a buck, it seems like a no-brainer, right?
That's where time frame comes into play. In order to buy shares at $0.47 plus get the warrant, an investor needs to be willing to hold the stock and warrant for at least nine months. There's no hedging or other arrangements that can be made unless you want to break a legal contract which no one should do.
They are running the offering through Dealmaker, here.
Here's what this means. If you're playing the stock for the current momentum, this probably won't appeal to you, but how about if you bought the stock around $0.50 initially. Why wouldn't someone consider selling half, then using most of the profits to enter a deal like this? All one would be doing is using profits to rebuy the shares plus get a warrant with those profits. They would actually increase their position while decreasing capital at risk. At worst, they've increased their position size without increasing capital risk.
But there's a catch. Isn't there always? If you sold an existing position for a profit, you could owe taxes. That's why I mention using "most" of the profits. Set aside some for taxes if you have to do so. Also, there's the nine month hold. If you have liquidity needs, this wouldn't be a place you could go to get the liquidity you may need. Lastly, there's no guarantee the stock won't be below $0.47 over the next nine months.
My view of Draganfly has always been longer term. If the story interests you, I think the open offering is a no-brainer. The biggest challenge is I see fewer and fewer investors with a time horizon of hours or days so even talking about something in terms of months feels dirty and foreign. While this one falls into the highest risk category of investments, getting a 60% downside cushion is rare. Even more, the current intrinsic gain of the deal is $1.14. That's roughly equal to the current stock price! Obviously, that can go away, however, if you're looking for an aggressive buy-and-hold in a sector still in its infancy, there's a different way to play Draganfly if your time frame fits it.