CYBR

Hi WyTaay, I agree with everything you say about CYBR:

They do have some compelling factors: 56% YoY Revenue growth, strong bookings, strong FCF, no debt, a belief by the CEO that they can expand from 2.5k customers accts to well beyond 10k, and a belief that their core product (privileged account security) is a need for virtually every company in every industry.

In addition to all of that, they have been independently recognized as a market leader, and just recently their Privileged Account Security Solution was added to the U.S. DoD Unified Capabilities Approved Products List (UC APL), which, according to the company, is the only comprehensive privileged account security solution on the list.

It’s a compelling story, and that Dept of Defense approval for privileged account security is an amazing feat for a what is actually a foreign (Israeli) company. (We’re talking Department of Defense here). I think that that must imply that the DOD felt privilege account security is REALLY essential to have, and that there were no other companies that were even close to CYBR in providing it.

However, I agree with your negative points as well. Even the adjusted PE is very high, and I don’t understand their outlook for declining earnings for 2016, at all. My only guess is that they are playing the estimates game and picking a number that they are sure to beat by a lot. but even that doesn’t explain such a low estimate. A puzzle. My position is only 0.6% however, which, to put it in perspective, is less than a tenth of the size of an average position.

I’ll try to write a review about the company in the next week or so.

Saul

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I think that that must imply that the DOD felt privilege account security is REALLY essential to have
Saul - I have been in and out and in this stock over the last year or so and managed to make successful gains. I wasn’t deliberately trading the stock more a cash flow allocation and reallocation. I even managed to switch out of some of my Imperva gains at the top of the market into CYBR that saved me from a 30% capital decline over at Imperva (which I still rate by the way). One of my more successful plays.

Anyhow - the point I wanted to make was, CYBR recently announced that virtually all cyber breaches now involve a privileged account component. Even if other companies offer a platform play, there is still an unmet need for CYBR. I hold alongside Fortinet, Imperva and Palo Alto which are all fast growing profitable cyber plays.

I’d like to know more about Gemalto though which I think is under-rated.

Cheers
Ant

Oh yeh - sorry one more point. I think CYBR stock benefited from the support coming from rumours of a potential takeover approach from Check Point which has been floating around in the last month. So unless that gets completely killed which never happens with rumours, you might find this has some downside protection as a perceived takeover target.
Ant

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Sorry, not terribly impressed with DoD putting a foreign product on the approved products list. This happens frequently and specially so with Israeli products.

Cyber security is a tough game. It takes but one hacker to find the soft spot in CYBR (trust me, there’s a soft spot, probably a few). When the hacker pokes a hole through it, all their credibility is gone. Oh yeah, they’ll patch it, but that’s too late.

Every company that’s serious about cyber-security employs a layered approach, starting with physical controls at the perimeter and layer upon layer of software controls for data in motion and data at rest.

The one control that would be very hard to crack would be protection at that information asset level, Unfortunately, there is no product on the market (well, was no product as of a few years ago, I haven’t kept up), that implements protection policies at this level.

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Why not? Because it is un-American. Frankly as a shareholder of CYBR and a Brit in Singapore, I’m delighted that nationalism has not played a part in this commercial best of breed recommendation/selection. I think there is more than enough overt and covert US protectionism that goes on.

Of course just because CYBR is on the approved products list doesn’t prevent a layered approach to be adopted that includes CYBR - which is something I agree with.

Ant

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