Why did Patriot One (PAT.T) surge 20% on a day without news?

10/16/2019

On October 16, 2019 Patriot One (PAT.T)  – an A.I-driven concealed weapons-detection company – jumped 20% on no news.

That got the bull-board pundits jumping.

“It would be amazing if shorts are not covering,” wrote Kyyaman08, “The action today seemed to be a lot of motivated buyers. But If it wasn’t shorts covering that just means we have a lot of new longs desperately wanting to own the stock.”

“Any radar experts in the crowd who want to join me to start our own company?” queried another more skeptical investor, “We will make a fortune from these chumps!   We can just download software to our phones and won’t have to worry about shitting the bed over an FCC application.”

Indeed – when launching a new tech company, it is always a good idea to “not shit the bed over an FCC application”.

Equity Guru had a late-night chat with Jeff Tindale, Senior V.P of PAT.T Capital Markets who shed some light on Patriot One’s 1-day dramatic stock price movement.

Tindale believes the spike was a confluence of events which could – as Kyyaman08 surmised – include short-covering.

“Short covering is necessary in order to close an open short position,” states Investopedia, “A short position will be profitable if it is covered at a lower price than the initial transaction and will incur a loss if it is covered at a higher price than the initial transaction.”

Tindale revealed that Patriot One management just completed an eastern-swing road show – hitting Toronto, Montreal and the N.Y.C. – pitching a total of 19 “buy-side” groups including U.S. hedge funds.

Interest in Patriot One is heating up stateside.

With a market cap of CND $250 million, PAT is sitting in a sweet spot where the company – with some share restructuring – could attempt a move to the NASDAQ.  That often brings in new buying, although we’ve seen plenty of Canadian companies bungle that transition.

It’s also true that – from the perspective of U.S. institutional investors – PAT’s roster of Senior Advisors is eye-popping.

On September 04, 2019, PAT announced that retired Vice Admiral Robert Stiles Harward Jr. has joined the Company’s Senior Advisory Board.

Harward Jr the former Deputy Commander of the United States Central Command, under the leadership command of General James Mattis.  He is currently working with Lockheed Martin in the UAE, Bahrain, Kuwait, Oman, Jordan, Lebanon, Qatar, Pakistan, Iraq and Afghanistan.

Other Senior Advisors:

Governor Tom Ridge – First U.S. Secretary of Homeland Security
Karl Wagner – retired Deputy Director of Central Intelligence Agency
Ward Elcock – former Canadian Deputy Minister for Public Safety
Andrew Brear – former senior British diplomat
Jamie Hamilton Graham – former Chief Constable of the Vancouver Police Department
Michael Rozin – President of Rozin Security.

If this roster of advisors was a bowl of apples, you would suspect that they had been genetically modified.

Individually, they are bigger and shinier than normally occurs in nature.

Together, in a bowl, they look surreal.

PAT’s “Cognitive Microwave Radar” detects concealed weapons from parking lots to buildings.

“Most incidents occur at locations in which the killers find little impediment in pressing their attack,” explains Patriot One. “Locations are generally described as soft targets, that is, they carry limited security measures to protect members of the public.”

The ability to “covertly detect” weapons is critical to PAT’s utility in public environments, that can not be turned into military zones, with visible metal detectors.

Schools, churches, hotels, stadiums…

“It’s time to make soft targets hard without impacting citizens’ rights and freedoms,” stated PAT CEO Martin Cronin. “We believe that we have a practical solution to prevent deaths in public places without traumatizing the general population.”

Another facet of Patriot One that generated interest from U.S. investors on the recent eastern roadshow, is Patriot One’s acquisition of Xtract Technologies and all its related assets in a cash and stock deal worth CAD $6 million and 9,422,956 consideration shares.

On July 31, the two companies announced a “collaboration agreement” to explore how artificial intelligence can enhance PATSCAN’s sensor threat protection technology.

“With new sales opportunities arising every day for a covertly deployed, multi-sensor security solution,” states Cronin, “integrating Xtract more deeply into our development and day-to-day operations made perfect sense.”

Xtract is advancing the state of artificial intelligence by developing deep neural network technology that scales how machines learn. This technology is core to PAT’s platform.

Universities are natural locations for discreet weapons-detection technology.  It is not practical to frisk 15,000 students a day – nor would that be good PR for the university to remind the student population that is vulnerable to a gun attack.

Having an insurance policy against violent crime is an important selling point for the parents of international students who are inundated with media reports of rogue American shooters.

Last winter, a Beijing a factory owner told me he was sending both his children to university in Australia because of his fear of gun violence on U.S campuses.

In this podcast, Martin Cronin explains the ambitions of the company with Equity Guru’s Guy Bennett.

PAT recently signed a multi-year reseller agreement for its PATSCAN VRS solution, which automates the detection of weapons and suspicious behaviour. The contract is valued at just under $6.3 million.

Patriot One is a volatile stock.  PAT’s long-term prospects depend on the full commercialisation of its technology.

The opioid crisis and gun violence are two of the biggest problems in the U.S.

Patriot One can’t solve the opioid crisis.

But the A.I-driven technology can reduce deaths by gun violence.

That’s a message a N.Y.C hedge fund manager would be interested in, and it may be part of the reason for the October 15, 2019 20% stock price surge.

– Lukas Kane

Full Disclosure: Patriot One is an Equity Guru marketing client.

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Comments 7

  1. Matt says:

    Actually pat is looking to solve opioid crisis. They are developing their STS technology to detect explosives and narcotics.

    • Lukas Kane says:

      Matt, you are right about Pat’s STS Technology, it’s an all-senses alert system. But widespread commercial deployment of this tech would NOT “solve the opioid crisis”. For one thing, 3X more poor people die of opioid overdoses, than rich people. Poor people are less likely to attend stadium events, go to private universities, or walk into Las Vegas Hotels (likely 1st-phase venues for PAT’s tech). I suspect you know that. So please excuse my didactic response. It is always good to hear from readers.

  2. Ken Hughes says:

    Hey Lukas, Just to be clear, the folks named in your article are Senior Advisors to Patriot One’s Board of Directors, and they are certainly an impressive group of individuals. At the next AGM, to be held on November 5th, 2019, the Board of Directors will be set as five members – to be voted in at that meeting. They are:
    1) Martin Cronin, CEO, President and Director
    2) Scott Shepherd, Director
    3) John Gillies, Director
    4) Peter van der Gracht, Director
    5) Victoria Calvert, Director

    • Lukas Kane says:

      Ken, good catch. A “Strategic Advisor” is not the same thing as a board member. I have amended the article to reflect your input. Thank you for sorting me out on this.

  3. Nightstocker says:

    Uhhhh..no news? They just announced their Patscan platform is being installed at the Cincinnati Red’s ballpark. Shake your head.

    • Lukas Kane says:

      Nightstocker, we covered that in a LATER article. Check the (no news, 20% stock surge) publication date. That said, I will give my head a shake for the macro health benefits that are in it. Happy you are following PAT. We love the company.

  4. Anthony Maw says:

    Its not hard to see how the use of low energy microwave radar to generate the primary data set with or without AI analysis can easily be defeated…. For investors it’s the issues that they may not be cognizant of that can lead to disappointment….

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