Author: Gehman Capital
Covestor model: Undervalued Growth Companies
Portfolio holding Wave Systems Corp (WAVX) sells and manages software to deliver improved security for information networks through the use of Trusted Platform Modules (TPMs). Trusted Computing is an industry standard that increases network security by functions such as authentication, and controlling access to machines and encrypting information. IT managers have been slow to accept the technology, but momentum is now building.
Cyber espionage can cost corporations considerable losses. WAVX offers an integrated, cohesive security solution for data-in-motion and data-at-rest before it accesses the network. Major WAVX customers include General Motors, BASF and Price Waterhouse, in addition to a base of smaller companies.
I believe WAVX will close larger contracts going forward because Trusted Computing is gaining recognition and WAVX has created products that are important to increase IT security. The company has giant competitors such as Intel/McAfee and Symantec, which offer a broad range of security products.
The Trusted Computing Group (TCG), formed by the largest computer manufacturers, created industry standards for Trusted Computing that utilize hardware and software to offer improved computer security and efficiency. Trusted Computing is controlled by a chip (TPM), attached outside of the computer's operating system, that controls access to network information. The chip, highly (not absolutely) secure, enables user and machine authentication that permits only trusted devices to access network information. This is device-based security that utilizes encrypted keys to increase existing security software.
Wave Systems is the leading provider of software to manage Trusted Computing hardware for major corporations, enterprises and governments. The addressable market is growing significantly and standards are evolving. WAVX has committed significant time and money to define, educate and begin to penetrate this emerging market.
The National Security Agency and other government agencies have made Trusted Computing technology a central element in their security vision. Events such as the 2nd Annual Trusted Computing Conference and Exposition held by The National Security Agency (Sept, 2011 – Orlando, FL), with over 600 attendees including Intel, Microsoft, Cisco and Seagate, communicate the clear benefits that trusted computing solutions bring to devices when integrated throughout the enterprise.
Source: Google Finance
The stock, trading around $2.70 as of 10/17/11, is expensive based on a traditional investment analysis.