5/23/2013

Building Value Before it’s Reported on the Financial Statements


Datawatch (DWCH) is a stock I’ve owned for some time. In fact I did a query on the blog, click to view.


Over time the company has continued to improve with the stock market recognizing some of their achievements. But more importantly the real story begins over the past ~ 1.5 years. Material improvements in operations have been aggressively achieved that have yet to be fully realized on the financials. 

Taken from my SeekingAlpha post,  Datawatch: Deeper ValueFor A Lower Price.


As an investor, ask yourself why successful executive leaders, management and staff would leave respected roles at leading secure technology/BI employers to risk it all at a tiny company. These moves over the past year or so demonstrate the underlying potential future value of Datawatch. These new executive recruits have years of knowledge in this analytic space to make an informed decision.
Let's take a brief look at some the recent recruits. Recruitment talent is far more relevant to Datawatch's future value than any other historical financial metric. It started with Vice chairman Dave Mahoney, former CEO of Applix and other technology successes. Mahoney joined the board, then months later now CEO Michael Morrison left IBM/Cognos. Morrison was the former COO of Applix. Note Applix was acquired by Cognos then quickly by IBM, where both Morrison (COO) and Mahoney (CEO) were executives.

Some other new executivemanagement that have recently joined Datawatch after CEO Morrison include Ben Plummer, Mike Carroll, Jon Pilkington and others, including new CFO (James Eliason) announced over the past few weeks. Eliason has deep industry corporate finance along with mergers and acquisitions experience. Ben Plummer joined Datawatch from "IBM Cognos where he was vice president, data discovery and analytics". Mike Carroll "led one of the highest performing of the five commercial teams within the IBM Business Analytics group", before joining Datawatch. Jon Pilkington, brings 18 years in the business intelligence industry including 13 years at various executive roles with Cognos. Also critical there is an entire new sales and marketing team with proven BI talent closing large deals.

The impact of these human capital changes is jaw dropping. Proven talent recruitment is near impossible for a tiny company that was in a slow yearly decline. I emphasize the recruitment success because it should provide investors additional confidence in DWCH 's technology and future continued growing market potential.

Let’s not forget over 40,000 organizations worldwide are using Datawatch’s products and services, including 99 of the Fortune 100. Also, new “Blueprint” solutions to address specific operational needs such as the new machine data accelerator. This new blueprint has many of the same exact log and activity analysis as Splunk (SPLK).

Another blueprint used in Healthcare is 835 analytics. . “Datawatch’s solutions have helped over 1000 healthcare organizations reduce costs, improve decision making, support strategic objectives, increase ROI, and ultimately improve the care provided.”

3 comments:

jeff said...

I hate to wish bad luck on you, but, part of me wants DWCH to fall back to where it was when you first started talking about it so that I can buy! ;)

Hope all is your way, bud!

ShadowStock said...

Thanks for the well wishes, I think.

Ouch…the first SA post the stock was; “a microcap stock ($7.10 million market cap)”.

The stock closed today with a market cap of … are you ready…88.72million. I’m not a fan or give much credence to forecasting. I prefer to buy assets for a price less than its market value. Mr. Ben Graham would not be happy that one of his “students” is making a prediction with a very non graham like stock but here goes. It’s going a lot higher, but as we know I can’t know that and saying that just completely cursed the stock, hope your happy now :)

Axster said...

Your most valuable posting, IMO. No company, big or little, can grow until the right talent is in place. Thanks for continuing to share your thoughts with the world.