Finally Got Some Potential Stock Leads In The Cybersecurity Area
I wrote about this subject about a week or so ago on this blog and I said I was looking for some potential companies to possibly get a footprint in with respect to the stock market. Data-mining, data-”farming,” the cloud, cyber security, cyber offense, etc. I mentioned then, that companies such as L3 Communications, ManTech, CACI, Booze/Allen & Hamilton, etc. were definitely players in this area; but, I was looking for the next level down.
Ted Schlein, Partner with Klein, Perkins, Caufield, & Byers was interviewed Friday afternoon on CNBC. Mr. Schlein was one of the first people in this new area to design cyber countermeasures and virus protection in the early days of Semantec. Mr. Schlein was asked for companies who are likely to benefit and grow as we try and get our arms around this difficult problem. As one would expect, Mr. Schlein said the complexity, scope, magnitude, speed, and sophistication of the cyber threat is expanding and changing faster than Moore’s Law, and in some cases compromising our critical infrastructure, stealing our personal information and corporate intellectual property/R&D designs, and virtually all aspects of our lives and daily commerce. He said there are two types of companies — those who know they have been breached and are taking steps to try and confront the problem and, those whom are in denial, naïve, and infected — despite their belief that they are fairly well protected. One has to assume breach up front and work from there. To assume otherwise will put you in a position for a nasty surprise or a cyber Black Swan event and denial of service, theft, or a fatal blow. Restoring faith and trust in your system — after a major breach — is no small matter. It isn’t good enough to just try and prevent a breach — the stakes have changed. There is a whole new industry cropping up in the cyber offensive area, as well as defense- in-depth. Bot “armies” mass and attempt to overwhelm the network by attacking vulnerable points simultaneously across the entire network.
So, what are the companies in the area of cyber security who looked poised to move to the next level as they see their business and services in high demand? Mr. Schlein named Mandiant as a leader in the area of broad detection & monitoring/breach. Bit+9, and EndGame are also in this “game.” These companies are working on a “bot-wall,” to deter attacks. As one of my most astute readers noted recently — not a single castle was able to withstand attack in Medieval Europe. Maginot Line – Not. Alamo – No. Still, it may work against 80% of the problem. The other area this will grow exponentially in the short-to-mid term is that of cyber offensive measures, cyber deterrence, cyber strategy, cyber response “tree,” and cyber forensics/attribution. Endgame is a key player in this area.
I want to try and take a position/footprint in this area from an investment standpoint. I do not know if any, some, or none of these are publicly traded companies. I will do some due diligence in the coming days. If you know of other companies I should consider — please forward them and I will try and get smart and tell you what I find out. I will have a note tomorrow (Sun.) on the stock market going into next week. The momentum is still to the upside. V/R, R.C. Porter.