Horizon Aircraft & eVTOL: Increase in allocation to small and micro-caps over the next 12 months

August 7, 2024

New Horizon Aircraft (NASDAQ: HOVR), doing business as Horizon Aircraft ('Horizon Aircraft' or the 'Company'), the advanced aerospace engineering company and developer of eVTOL (electric Vertical Take-Off and Landing) aircraft, publishes new global research* that indicates fund managers that invest primarily in small-cap and micro-cap stocks believe there will be an increased level of exposure to small and micro-caps from both institutional and retail investors over the year ahead.

The global study with small and micro-cap fund managers in the US, Canada, Europe, the Middle East and Asia with collectively $82.4 billion assets under management, found that 76% of respondents anticipate the level of exposure to small and micro-caps from institutional investors to increase over the next six to 12 months. One in three (34%) fund managers believe allocations could increase by 25% or more.

The findings also reveal that 83% of fund manager respondents expect retail investors to increase their allocation of small and micro-caps over the next six to 12 months. Over half (52%) of respondents believe that the allocation could increase by more than 25%, and one in eight (12%) believe that exposure to small and micro-caps could rise by more than 50%.

One in three fund managers describe the current level of exposure from institutional investors to both small- and micro-caps as being underweight, with 21% of respondents describing the allocation to micro-caps as being 'slightly underweight' and 11% describing it as being 'extremely underweight'. Institutional investors’ current level of exposure to small-caps and micro-caps is described as being overweight by 4% and 23%, respectively. A similar picture is seen with retail investors, with fund managers describing this group’s allocation to small-caps and micro-caps as being underweight (32% and 27%, respectively) and as being overweight (17% and 13%, respectively).

Brandon Robinson, CEO of Horizon Aircraft, said: 'Our research indicates that one third of fund managers believe that exposure to small and micro-caps by both institutional and retail investors is lower than it should be. However, with forecasted interest rate cuts and market conditions set to improve, fund managers are anticipating that investors will be looking to significantly increase their allocation to small and micro-cap stocks.'

'As the economy rebounds, small and micro-cap companies can have a higher growth potential than large-cap companies due to their smaller revenue bases and their agility to capitalize on opportunities. This has historically made them more attractive to investors who are driven by the potential for high returns and greater earnings acceleration in the next 12 months.'

Horizon Aircraft’s Cavorite X7 aircraft will have a gross weight of an estimated 5,500 lbs with a projected useful load of 1,500 lbs. With an anticipated maximum speed of 250 miles per hour and an average range of over 500 miles with fuel reserves, Horizon believes that this experimental aircraft, if eventually licensed for commercial use, would be well-positioned to excel in medical evacuation, critical supply delivery, disaster relief, and special military missions. The Company believes that the proposed aircraft would also be attractive for Regional Air Mobility – moving people and cargo 50 to 500 miles.

Unlike many in its category, the Cavorite X7 is being designed with a hybrid electric power system. The Company is designing the Cavorite X7 such that it could, after its vertical takeoff, re-charge its batteries enroute when it is flying in a configuration like a traditional aircraft. After a vertical landing and completion of a mission, the Company is designing the Cavorite X7 to recharge its battery array in under 30 minutes to be ready for its next mission.

Horizon believes that its innovative approach and technology will allow the Cavorite X7 to fly 98% of its mission in a very low-drag configuration like a traditional aircraft. The Company believes that flying most of the time as a normal aircraft is also safer and will make the aircraft easier to certify than other radical new eVTOL designs. The Cavorite X7 is designed to be powered by a hybrid electric system that will recharge the battery array in-flight and post-flight, while also providing significant system redundancy. The Company is continuing the testing of its 50%-scale aircraft that it believes will reduce technical risk moving forward as it continues to develop its full-scale aircraft.