Does Kraken Robotics have another run in it?

StoneCastle Investment Management president and portfolio manager Bruce Campbell says Kraken Robotics (Kraken Robotics Stock Quote, Chart, News, Analysts, Financials TSXV:PNG) has been disappointing after expectations got ahead of the stock earlier this year.

Speaking on BNN Bloomberg’s Market Call on Sept. 25, Campbell said Kraken has continued to see defence-related tailwinds and has completed an acquisition that diversifies the business.

But the investor said concerns have emerged around whether Palantir, one of Kraken’s major customers, could move to develop its own underwater batteries.

Kraken specializes in subsea batteries that can operate under pressure, along with mine-hunting and underwater surveillance technology.

Campbell said Palantir job postings for battery engineers have raised questions about whether the company may build out that capability internally.

He said Kraken is a reminder of the importance of position sizing and having a disciplined process for smaller companies.

StoneCastle previously owned Kraken but was stopped out of the position.

Campbell said the firm has not re-entered the stock, but is watching it again.

“It’s one that we certainly think that there’s opportunity there and it looks like it’s been basing and could potentially start the next move up,” Campbell said.

Kraken shares closed Sept. 28 at $4.57. The stock is up 2.6% over the past 12 months.

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