Longer Term Investment Opportunities / Possibilities -- Update 9/17/01...Borrowed from another thread...
Airport and crowd security systems (more details below)
· INVN [Now at 1.44 times sales ttm – trailing 12 months, based on price about 2:30 PM EDT 9/17/01.]
· VISG [Now at 2.34 times sales ttm.]
· VII [Now at 0.259 times sales ttm.]
· ICTS [Now at 0.336 times sales ttm.]
· MAGS [Now at 1.54 times sales ttm.]
· VSNX [Now at 3.25 times sales ttm.]
· HON deleted from list; while it does have a role in security the negatives of airline downsizing
· PKI deleted from list since it previously announced it was selling its airport security system subsidiary.
Secular long-term plays on decentralization:
· Off-site data storage and hosting [EMC, NTAP, SDS, STOR, EXDS. However, EXDS has such a massive debt load that the common stock has little chance to prosper]
· Disaster Recovery [IBM, CDO, IRM]
· Fiber optic – metropolitan and last-mile solutions for business and residential use [ONIS and LPTH for its 16% ownership of Lightchip, Inc. ONIS trades at 8.88 times ttm sales. LPTH trades at 2.17 times ttm sales, which does not reflect any value for Lightchip ownership]
· Suburban office space in secondary cities and near NYC [Is The Superscraper Obsolete? forbes.com]
· Connecting suburban offices and telecommuters [CSCO]
· Fuel cells and distributed power, but remember that these are very pricey already [BLDP trades at 24.64 times ttm sales. PLUG trades at 80.21 times ttm sales. CPST trades at 9.8 times ttm sales. HPOW trades at 65.99 times ttm sales. PRTN trades at 130.33 times ttm sales].
· Video conferencing [PLCM, ACTT, VCST] However, these do not look promising: VSIN.OB, VTEL Corporation, d.b.a. Forgent Corporation (FORG)
Rebuild infrastructure and engineering
· CAT
Office REIT’s with space available in metro DC and NYC [Charts in “Real Estate” list at StockCharts.com]
· My top pick is LRY. See more detailed analysis below.
National Defense and Security
· Boeing (BA) – but overshadowing the defense build-up is the likelihood that airlines will shrink considerably, and that orders to BA will be canceled.
· Lockheed Martin (LMT)
· Northrup (NOC)
· General Dynamics (GD)
· Ratheon (RTN)
Health Related (including pharmaceuticals)
· PFE
· MRK
· PHA
Domestic E+P and Oil Service – but the market does not agree with me on 9/17/01
· BHI
· BJS
· DO
· GLM
· HAL
· MDR
· NBR
· NE
· NR
· PTEN
· RDC
· RIG
· SFY
· SII
· VRC
InVision Technologies, Inc. (INVN) markets advanced detection and inspection products by adapting various medical and laboratory technologies for government and commercial uses, such as security, defense and process control. InVision is the worldwide leader in explosive detection technology. The Company develops, manufactures, markets and supports explosive detection systems for civil aviation security based on advanced computed tomography (CT) technology. The Company's products were the first automated explosive detection systems to be certified by the Federal Aviation Administration as meeting its stringent requirements. The Company has sold an aggregate of 231 systems to the FAA, foreign aviation security agencies, and domestic and foreign airports and airlines.
Viisage Technology, Inc. (VISG) is engaged in the field of biometrics technology and in providing digital identification systems and solutions. The Company focuses on identification solutions that improve personal convenience and security, deter fraud and reduce identification program costs. Viisage combines its systems integration and software design capabilities with its proprietary software and hardware products and other industry-standard products to create complete customized solutions. These turnkey solutions integrate image and data capture, create relational databases, incorporate multiple biometrics and improve customers' ability to move and manage information. Applications can include driver's licenses, voter registration, national ID's, law enforcement, social services, access control and PC network and Internet access security. Viisage products annually produce more than 20 million identification documents at more than 1,200 locations in 13 states.
Vicon Industries, Inc. (VII) designs, manufactures, assembles and markets a wide range of video systems and system components used for security, surveillance, safety and control purposes by a broad group of end users. The Company's products are typically used for crime deterrence, visual documentation, observation of inaccessible or hazardous areas, enhancing safety, managing personal liability, obtaining cost savings (such as lower insurance premiums), managing control systems and improving the efficiency and effectiveness of personnel. The Company's products are used in office buildings, manufacturing plants, apartment complexes, retail stores, government facilities, transportation operations, prisons, casinos, sports arenas, healthcare facilities and financial institutions.
ICTS International N.V. is a provider of enhanced aviation security services and other aviation services. The Company's key function has been the implementation of passenger risk evaluation and classification procedures, generally described as "advanced passenger screening." Other security services provided in Europe include other general airport security services, such as the operation of check-points and hold-baggage screening systems, and to a lesser extent, certain aviation passenger handling services and certain general security services. ICTS also provides similar airport services in United States including agent services, guard services, janitorial services, maintenance, pre-departure screening, ramp services, shuttle service, skycap services and wheelchair attendants. ICTS is also engaged in security consulting, training and auditing for airlines and airports.
Magal Security Systems Ltd. (MAGS is based in Israel) develops, manufactures, markets and sells computerized security systems. The Company's products include perimeter security systems and a video motion detection system, which automatically detect and locate intruders and identify the nature of intrusions, x-ray screening and detection systems, including AISYS, an explosive device detection system that automatically detects, locates and identifies explosive devices in luggage, packages and other parcels, and a pallets x-ray screening machine used to screen large cargoes and those loaded on standard pallets, and MagNet, a security management system that integrates the management, control and display of various security systems into a single, real-time database. Magal systems are used to protect aircraft, national borders and sensitive facilities, including military bases, power plant installations, airports, postal facilities, prisons and industrial locations, from terrorism, theft and other security threats.
Visionics Corporation (VSNX) is a worldwide producer of identification technologies and systems. Through its respective business lines, FaceIt, live scan and IBIS, the Company designs and manufacturers forensic quality biometric identification systems and develops and deploys facial recognition technology. The FaceIt technology enables a broad range of products and applications built by partners (OEMs, VARs and system integrators). These include enhanced CCTV systems, identity fraud applications and authentication systems for information security, access control, travel, banking and e-commerce. The TENPRINTER and FingerPrinter CMS are live scan systems used by government agencies, law enforcement, airports, banks and other commercial institutions. The IBIS is a remote identification system that combines expertise in biometric capture and connectivity, and is capable of capturing both forensic quality fingerprints and photographs for transmission to law enforcement and other legacy databases.
VSNX develops and deploys facial recognition technology and designs and manufactures fingerprint biometric identification systems. For the nine months ended 6/30/01, revenues rose 30% to $22.3 million. Net loss before acct. change rose from $612 thousand to $3.8 million. Revenues reflect higher FaceIt license and live scan maintenance revenues. Net loss reflects lower gross margins and higher sales, marketing and product development costs and $2.2 million in merger related costs.
REIT analysis
1. Liberty Properties Trust. LRY owns office and industrial properties developed by Rouse. According to the 10-K for December 31, LRY has 7.82 MSF of office space in New Jersey, 79.6% leased; 6.6 MSF of offices in Maryland, 99.8% leased; and 11.88 MSF of office space in Virginia, 94.9% leased. LRY also has some available Flex space –8.65 MSF total in NJ, 91.6% leased; 4.4 MSF in VA, 97.2% leased. LRY also had 597,000 SF of flex space and office space under development as of 12/31/00 scheduled for delivery in Q2, Q3 and Q4 of 2001. LRY owned 1,139 acres for development as of 12/31/00.
2. Corporate Office Properties Trust (OFC) -- As of August 8, 2001, the OFC portfolio consisted of 92 properties totaling 7.1 million square feet of space, primarily situated in Maryland, Pennsylvania and New Jersey. 13 properties in northern and central NJ with a total of 905,000 SF at June 30, 94% occupied. OFC has 58 properties in the Baltimore/Washington Corridor – 4.4 MSF finished (98% occupied) plus 720,000 SF under development scheduled for delivery September to December 2001.
3. Glenborough Realty Trust. GLB has 456,000 SF of office in northern Virginia and 981,000 SF in the Baltimore/Washington corridor. GLB has space in northern NJ (part of 3.1 MSF office in Eastern US). Overall average occupancy is 94% office, 97% industrial.
4. Prentiss Properties. PP has 25 properties in suburban DC. Of these 24 were substantially occupied, while a new 182,000 SF building was at 0% on 12/31/00.
5. Boston Properties. BXP has 44%+ of total rental revenue from DC and midtown NYC as of June 30. As of June 20 BXP had 33 million square feet of office space, including 5.1 million square feet under development. According to the press release, at June 30, occupied space is 98% in metro DC, 99.8% in midtown NYC, 96.6% in Princeton/East Brunswick, 99.8% in Baltimore.
6. Mack Cali Realty. CLI has half-ownership of a 94.5% leased building in Parsippany but it is only 156,000 square feet. CLI owns 9.127 million square feet in Northern NJ (97.9% leased at June 30), 2.687 million SF in Central NJ (97.8% leased) and 4.385 MSF in Westchester Co., NY (97.3% leased).
7. CarrAmerica Realty. CRE has several million SF in metro DC, but at June 30 the buildings were 98.4% to 100% occupied.
8. Equity Office Properties. EOP is the largest office REIT. EOP has 14 buildings in greater NYC (6.8 MSF, 98.4% occupied) and 38 buildings in greater DC (8.3 MSF, 97.4% occupied).
9. KE – none
10. KIM – none
11. Lexington Corporate Properties. LXP holds net leased properties; no vacancies.
12. PGE – primarily Chicago.
13. Federal Realty Trust is primarily retail oriented.
ONIS Overview (note – 52 week low on 9/10/01, but then priced at 8.88 times trailing 12 months sales. Has $300 million convertible debentures outstanding vs. $681 million equity)
Four years ago, the founders of ONI Systems (then known as Optical Networks Inc.) had a vision for a new kind of optical network, one focused on the metro space. While others discounted the need, or focused on long-haul markets, ONI quietly built several groundbreaking products, a strong reputation -- and an expanding base of pioneering customers. ONI (NASDAQ: ONIS) now manufactures sophisticated, customer-proven optical systems for edge, metro and regional networks, woven together by its unique OPTX software. Key features include high channel counts in a compact footprint; speeds up to OC-192; a robust family of modular multiplexers; protection schemes that preserve precious wavelengths; automated power management; and much more.
Today metro and regional markets are widely regarded as the heart of the optical opportunity, and suddenly every vendor claims to offer a “metro” product. But delivering products truly tailored for metro and regional markets is no easy feat. Key capabilities include:
· Multi-service capability. ONI’s products allow service providers to introduce and support a changing mix of services without deploying dedicated equipment for each service, and are compatible with existing services based on the synchronous optical network (SONET) standard.
· Manageability and flexibility. ONI’s OPTX software enables real-time end-to-end management, real-time surveillance, interoperability with third-party software and equipment, and point-and-click service activation.
· Cost effectiveness and scalability. ONI solutions are designed to scale efficiently as demand for bandwidth and new services increases. ONI products help customers lower network operating costs by reducing the amount of equipment required, and by allowing them to install their equipment incrementally in a pay-as-you-grow fashion without sacrificing their existing infrastructure investments.
· Rapid and efficient service restoration. Robust protection schemes provide for rapid restoration of mission critical services, without wasting valuable network capacity on this capability.
· Sophisticated optical architecture, eliminating many costly and inefficient optical to electrical conversions within a network. |
