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Compass Diversified Holdings Message Board

marty.chilberg 13 posts  |  Last Activity: Nov 26, 2015 1:31 PM Member since: Dec 30, 2009
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  • Reply to


    by ggrail Sep 1, 2015 11:15 AM
    marty.chilberg marty.chilberg Sep 1, 2015 3:21 PM Flag

    Surprised you interpret his post as ggrail looking to message boards for direction. I personally find It is much easier to identify character or the lack thereof on boards.

  • Reply to


    by ggrail Sep 1, 2015 11:15 AM
    marty.chilberg marty.chilberg Sep 1, 2015 5:13 PM Flag

    Hope so. but we need to eliminate some of the uncertainty that is creating the vol. With Fed policy, China growth, energy supply vs demand, Euro zone concerns, continued cyberterrorism in a connected world qualms and still lingering deficit issues it's hard to be surprised we are feeling unsettled.

    GIve us a quarter point fed raise with a soft guidance policy and things will look better:
    - China has been a worry for years and it's still growing with only 0.5% impact on US GDP.
    - Oil production is slowing next year and it's becoming clear that buyers are starting to enter which signals a bottoming process.
    - Eurozone failure is almost in rear view mirror again.
    - Cyber Security will benefit again looking forward but this one isn't going away so we'll just have to learn to live with the headline risk.

    I don't know how much deeper the selloff will cut but history tells us 90% of the time we see a V shaped recovery -if it stays a correction- and returns to the prior high in 1.4x the duration. Could be forgotten by the time we are start the world series!

    But don't take this as direction:)...Just another opinion to throw into the mix.

  • marty.chilberg marty.chilberg Sep 4, 2015 8:48 PM Flag

    NSA-grade encryption for mobile over untrusted networks
    By Stephanie Kanowitz
    Aug 07, 2015
    The only term being thrown around government more than “2016 elections” these days is “cybersecurity,” particularly following a rash of damaging and high-profile data breaches. With that focus on protecting information top of mind in agencies, USMobile officials hope to find a ready market for their commercial app, which lets government workers use their personal smartphones for top-secret communications.

    Called Scrambl3, the app creates a secure virtual-private network that connects bring-your-own devices to an agency server to send messages using end-to-end encryption. Irvine, Calif.- based USMobile developed the Scrambl3 technology when team members worked with the National Security Agency to create “Fishbowl,” a secure phone network available only to Defense Department users via the DOD Information Network.

    “We’ve implemented Fishbowl in the form of a software-defined network, so all of those typical hardware components that you’d find in a mobile network -- routers, VPNs, gateways, firewalls, proxy servers -- all of those components are expressed or implemented in our system in the form of software,” said Jon Hanour, USMobile’s president and CEO. “We’ve made an affordable version of Fishbowl.”

    When the turnkey solution comes to market in October, it will work with Android and Apple iOS devices. It uses the Security-Enhanced Linux operating system and a defense-in-depth approachThe layered approach uses a VPN connection with an encrypted VoIP call travelling within.When an agency deploys Scrambl3 Enterprise, administrators will set up what USMobile calls Black Books, or lists of contacts that each user can communicate with via the VPN.

    “A lower-level person wouldn’t necessarily have the director of that particular agency listed,” Hanour said. “Conversely, the director of that particular agency would have [a] contact list populated with people that are at the higher levels of management.”

    When a user logs into the app on a smartphone, it creates a VPN that connects to the agency’s server, whether it’s in the cloud or on premises. Currently, Scrambl3 Enterprise software is deployed only on IBM Power Systems Linux servers.

    A two-rack server can handle up to 3,000 concurrent calls, Hanour said, a capacity “that would handle comfortably an agency of 50,000 people.”

    Once connected, users can see who in their Black Book is also logged in, as indicated by a green dot next to the name, and then select the mode of communication: email, voice call or text. Both senders and recipients would need to have Scrambl3 installed.

    “Once you establish this powerful VPN, you can run anything through it,” Hanour said. “Anything that you can put on a server, you can use Scrambl3 to communicate with.”

    Calls are highly encrypted until they reach the recipient, where the app decrypts them. That communication happens at a top-secret-grade level as specified by NSA. Despite that encryption/decryption process, Hanour said, latency is unnoticeable.

    For additional protection, nothing is recorded – users can’t even leave voicemail – unless an agency specifies otherwise. For instance, Hanour said, some law enforcement regulations require that all communication among officers be recorded.

    The law enforcement community is a prime target customer for Scrambl3 because public cell phone networks don’t meet heightened police security standards, and photographic evidence requires a secure uploading process.

    To use Scrambl3, agencies don’t need mobile device management systems, but it integrates with any that might exist.

    “The advantage of this architecture is that the communication that the mobile device management software would typically have with the device, that communication can now run inside the VPN, so it makes that even more secure,” Hanour said. “It creates value for the mobile device management system as well because you can protect it inside the VPN.”

    Licensing fees for Scrambl3 depend on the number of users, but typically start at $5 per user per month. The most it would cost, Hanour said, is about $10 per user per month.

    Right now, Scrambl3 for Android is available in beta form in the Google Play Store for testing. Scramble3 for iOS will be available next month.

    The beta version does not include all Scrambl3’s features, such as conference calling. When the release version is up and running in October, Scrambl3 will offer the only top-secret-grade conference call capability outside DOD’s network, Hanour said. Users will be able to initiate a conference call by touching a few people’s names and pressing the call button.

    Besides law enforcement, Hanour sees potential customers in several types of government operations, including health care, the State Department when conducting diplomatic relations and even individual politicians, who might want to communicate in absolute privacy.

    “The whole idea is to create trusted communications over untrusted networks (i.e., the Internet),” Hanour said.

  • Reply to

    Hard to Argue

    by confirmsummary1970 Sep 30, 2015 12:40 PM
    marty.chilberg marty.chilberg Oct 3, 2015 11:54 AM Flag

    True but also not hard to ascertain what is behind the selloff. The bigger Q is whether this creates an opportunity to go long or short.

    Full disclosure: I been accumulating though still have less than a full position in WYY. I'm not a huge fan of companies that are so dependent on govt contracts because of the heavy cost of obtaining funding orders and the low margins to fulfill them. My reason for investing in WYY is that it is a nice risk/reward trading opportunity for a double. Third time in the company but past 2 were also under weight positions.

    The selloff has had numerous trigger points:
    1) Hack and perhaps other investors forced liquidation due to market cap
    2) Govt shutdown worries
    3) Q2 miss
    4) Deterioration of FCF over last 3 quarters. Dec was roughly neutral followed by about $2m burn in 1H 2015
    5) Build of AR over last 4 quarters is disproportionate to revenues. DSO simple calculation: Q3-14 77days, Q4-14 77 days, Q1-15 81 days, Q2-15 93 days
    6) Macro selloff of companies with any capital or credit concerns.

    My ranking of these issues reltative to risk/reward:
    1) Opportunistic short term. Selling pressure from forced liquidation should be over.
    2) Opportunistic intermedicate. Not a long term issue due to overall climate of increasing need for security. Might linger through EOY.
    3) Neutral. Never good to miss but for a small company I give them a little leeway. One of the reasons why I won't go a full position yet.
    4) Risk but consistent with small company reliant on govt business. More risk than reward for me.
    5) Higher risk. Helps explain 4 but in any business longer collection cycles for billings is on the radar of any investor. If this deteriorates again in Q3 I'll liquidate any position.
    6) Company neutral. Adding to the issues in AR and FCF and the miss in Q2 means the increased risk of dilution is real. The market reaction elsewhere is greater so it's not a primary reason to put money at risk in WYY.

  • Reply to

    Hard to Argue

    by confirmsummary1970 Sep 30, 2015 12:40 PM
    marty.chilberg marty.chilberg Oct 3, 2015 2:23 PM Flag

    Hey philoette happy to try to respond. First tough on your last statement of increasing revenues and earnings....I don't disagree but they were very evasive on the call with respect to Q3 and when they would get to profits so I'm cautious in the short term. They seem well situated for a run in C16 but it would appear most analysts are skeptical in the very short term.

    With respect to your Q on DSO, my short answer is I don't know. The longer version is that there are multiple potential reasons and the reason most analysts/mm's watch this is that some of them are quite negative. Not sure what is driving the WYY trend but some common drivers I've seen elsewhere include:

    1) Quarterly evenues are becoming more back end oriented. That is natural in the Sep quarter due to international seasonality and can also occur because of US fiscal year end. When it occurs in other quarters it could signal a company having to scramble to get revenue in the final few weeks of a quarter. That typically leads to discounting and increased risk of underachieving revenues.

    2) Customers are disatisfied with results and are holding payment for resolution.

    3) Mix of business is shifting to a channel that typically pays much slower. Happens a lot with companies doing bus with Costco for instance.

    4) Terms are being extended to close sales which can lead to reduced growth in future.

    5) Macro environment is pushing customers to prop up their reported cash by slowing payments at Q/E.

    6) Billings are in dispute. Resolution of the dispute could lead to writeoffs or discounts.

    Like I said, there are many possibilities and most of them are red flags. The trend is a negative one but not necessarily one that has a negative outcome, especially given the share price discount. Just make sure you watch it going forward and if it gets outside industry norms, I'd be concerned.

  • Reply to

    Anybody care to opine...

    by passionman_1361 Nov 2, 2015 8:07 PM
    marty.chilberg marty.chilberg Nov 3, 2015 3:28 PM Flag

    Congrats on going green. I sold my early high basis stock to take a tax loss a couple years ago but have done very well since now up over 60% even after selling 20% for a profit prior to this past cc. This looks like it wants to rally to $5 so I'm trying to sell some covered calls at that level for Dec.

  • Reply to

    Anybody care to opine...

    by passionman_1361 Nov 2, 2015 8:07 PM
    marty.chilberg marty.chilberg Nov 3, 2015 3:32 PM Flag

    Q3 was pretty weak on top line in both segments. Only saving grace on revenues and margin was the IP sale. The strategic review is ongoing and I think they said it would cost another $1m in Q4 so must be pretty thorough. The cost cutting that they mentioned is long overdue though the G&A line is where they have the most work to do. Backlog looks pretty solid now so any new order announcements will likely result in some incremental growth next year. Fwd PE is very reasonable so this is the type of company investors are rotating into. Undervalued and ones that don't have a lot of credit issues. Noble upgrade was pretty significant as he has been a long term follower and has not been shy to downgrade in past.

  • Reply to

    Anybody care to opine...

    by passionman_1361 Nov 2, 2015 8:07 PM
    marty.chilberg marty.chilberg Nov 3, 2015 10:55 PM Flag

    The best thing about this particular stock set up is that they have already announced earnings and guidance so we have 3 months before they could disappoint which is what generally has caused the selloffs.

  • marty.chilberg by marty.chilberg Nov 23, 2015 10:43 AM Flag

    I took a small position in CMTL after the selloff this am. I think there is a lot of untapped value in TSYS along with a bloated cost structure. Not a bad risk/reward with the stock down 10%:

    - CMTL has solid cash flow
    - CMTL claims this is cash accretive and will have some solid synergies in two years
    - CMTL buying back stock
    - CMTL pays 5% dividend

    - CMTL has seen declining revenues
    - CMTL has exposure to oil segment
    - CMTL is quite small so integration will be risky/challenge

    Mark Jordan of Noble also follows CMTL and has a buy on them, He will likely do a bullish outlook with his recent buy upgrade on TSYS.

    Hope everyone had a reasonable outcome with TSYS!

  • Reply to

    Comtech a buy?

    by marty.chilberg Nov 23, 2015 10:43 AM
    marty.chilberg marty.chilberg Nov 23, 2015 8:08 PM Flag

    Hey Adam-I probably won't have much time to analyze CMTL until early Dec. I did take a postiion today on the selloff open. Having a 10% haircut with a solid balance sheet and good dividend coverage along with a relatively small premium for TSYS was enough for me to take a flyer. Nice to be up about 5% already and I really think Mark Jordon will come out with some favorable remarks soon based upon his histoy with both companies. Should provide a little assistance.

    More later on my blog or on bridgetunnel

  • Reply to

    More M&A activity

    by philoette Nov 23, 2015 12:10 PM
    marty.chilberg marty.chilberg Nov 23, 2015 9:00 PM Flag

    Not a big surprise to see this acquisition given the actiivism and board committee to explore. Seems like a relatively modest premium though CMTL had seen a pull back after their earnings miss and TSYS has been pretty strong this year. I allocated 25% of my TSYS invesment back into Comtech as a flyer. Solid balance sheet. 10% deal pull back discount. 5+% yield with solid coverage ratio. I think they can do even better than the announced synergies as i've always felt TSYS was bloated, especially in G&A.

    Still holding a small position here but can't justify increasing given te lackluster performance of late. Need to get some of these options converted to funded orders.

  • Reply to

    Comtech a buy?

    by marty.chilberg Nov 23, 2015 10:43 AM
    marty.chilberg marty.chilberg Nov 24, 2015 12:06 PM Flag

    I added another blog post on SA about deal. The amount of leverage and likelihood of a capital raise are reasons why I'm going cautious on CMTL for now . Will do more analysis after the Dec conference call to har more.

  • Reply to

    Comtech a buy?

    by marty.chilberg Nov 23, 2015 10:43 AM
    marty.chilberg marty.chilberg Nov 26, 2015 1:31 PM Flag

    Hey Steve long time.
    It's not uncommon. Seems like lawyers file as a flyer and hope to catch some action. GIven price history of TSYS and the board comimitte to explore and their approval of this deal, the odds of any upside revision seems minimal.

    Still possible some 3rd party could come in but it would have to be hostile as this was already approved by both boards.

    Price action of stock seems to say that this will stay around a 1.25% discount to get cash early or around an annual rate of about 3%. That implies no expectation of improved price nor any real risk discount.

    Also worth watching option premiums. Last I checked the March $5 call could be sold for between $0.05 and $0.10. If you don't plan on selling now you might consider a covered call to squeeze out a little more in exchange for giving up any upside to the acq price.

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