I come from a cybersecurity background and do a lot of work on cybersecurity companies to understand their businesses and invest in them.
I’m sharing the research I’ve done on one company in particular, $MNDT, because it’s not only a beaten up stock in value territory that is looking better technically, but it is also more relevant today due to the Russia/Ukraine situation. I believe this is going to be the year for $MNDT.
As you may know, $MNDT was formerly $FEYE until they sold off the $FEYE product business and brand. This was actually the best possible move, as the product business was legacy and weighed heavily on the fundamentals of the company. Not to mention the very promotional ex-CEO of $FEYE marred the company’s reputation with investors… an uphill battle the current CEO, Kevin Mandia, has been fighting ever since. As a result, it will take some time for the new $MNDT to re-educate investors about what the company actually does and how it’s different from the old $FEYE. Even though investors will take some time to persuade, the cybersecurity world already has massive respect for Kevin Mandia and his team.
$MNDT is a threat intelligence company made up of some of the most brilliant cybersecurity analysts in the world. They are relied upon heavily by the US government and high risk enterprise organizations that need extra help with forensics, incident response, and intelligence before, during, and after breaches occur.
The biggest challenge $MNDT faces is resource constraint with their analysts, so it can be difficult to scale their expertise, as there are only so many people you can hire and hours they can work. What they are doing now, is working to use AI/ML to help scale their threat intelligence offerings through Mandiant Advantage.
Here’s where things get really interesting…
Because $MNDT got rid of the FEYE product business, which included endpoint security, SIEM, network security products, etc. they have actually GREATLY expanded their TAM.
Because they no longer compete with product companies that sell products in those categories, they can pursue partnerships with those product companies instead, and offer to be the threat intelligence layer behind those vendors’ product offerings. That is why you’re seeing partnerships like the one with $S (SentinelOne) starting to form.
Many people who do not understand the new $MNDT and their strategy balked at the idea of $MSFT buying them. I’m here you tell you those people have no idea what they’re talking about. $MSFT has been trying to build a reputation in security for years, and they are getting better at it. After some time, I would expect to see Charlie Bell promoted to CEO of Azure, and Kevin Mandia heading up Cybersecurity at $MSFT, if the acquisition goes through.
The cherry on top of all of this is that $MNDT is also undervalued from a fundamental perspective, even after yesterday’s rally. It’s trading for 6.5x forward sales. That is dirt cheap for a tech company. When you go look up the numbers and charts, they look skewed because of the sale of the $FEYE product business. They are in transition, so factor that in when you do your own DD, which you should do.
I’m not an investment advisor, I’ve just been working hard to analyze cybersecurity companies for the past several years, and wanted to share my thoughts about this company that gets no love.
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