Why the Pentagon needs this Aim-listed company

Data security is a major problem for the Pentagon

Is your data secure?

Ask that question a decade or two ago and you’d have got some funny looks. Until recently, a man in the street would have little or no ‘data’ worth stealing. But today, each and every one of us leaves a trail of private, personal data behind wherever we go.

Millions of credit card numbers, home addresses, children’s names – the sheer scale of data today is mind-boggling.

Back in the days of the Cold War, spy films would be filled with double agents trying to covertly photograph a single top-secret file.

But that image is a little out of date now, isn’t it? In this digital age, the US spy-turned-whistleblower, Edward Snowden, was able to steal 1.7 million US intelligence files; as well as 58,000 British ones for good measure.

Snowden really put this topic in the spotlight – it seemed incredible that one man could steal so much information from the US intelligence agencies.

But he’s just the most extreme example of what is a major problem for all governments and corporations: data security.

In today’s Penny Sleuth, I’m going to give you a quick run-through of this area – and show you a world-leading company in the field that I think we should keep an eye on.

But before all that, let’s take another look at the reasons why data security has become such a hot-button issue.

How your personal data was lost

In 2011, a laptop was stolen from Nasa which contained the codes to control the International Space Station. It was one of 48 mobile devices lost by the space agency over a two-year period.

At the same time, our own Ministry of Defence was busy losing 340 laptops, plus lots more memory sticks and mobile phones. The majority were unencrypted.

It’s not just dozy civil servants either. Earlier this year, major US retailer Target lost 70 million customer records and details of 40 million credit cards. The cost to the company will probably be over $1bn and the CEO has resigned.

Here in Europe, companies that breach data protection laws can be fined 5% of their worldwide turnover from next year. This is very serious stuff.

Given all the data leaks over the years, it’s understandable that data privacy has developed into a major concern for many people.

That’s where today’s company comes in. It’s perfectly placed to capitalise on our growing need to control and protect the vast amounts of information that are now part of our daily lives.

Let me introduce you…


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Blancco’s mission: make data safe

Looking at the above examples, there are clearly lots of things that data custodians could do better. But there’s one simple and cheap measure which could really help. It’s a service provided by a Finnish company called Blancco, which has just been acquired by Aim-listed Regenersis (RGS).

So what does it do? Put simply, Blancco’s software erases all the data on a device, with total accuracy.

This is a lot more difficult to guarantee than it sounds. Nowadays, a piece of corporate information will be stored across a whole range of devices: on the company’s physical network and on remote servers in the cloud.

It will also be on desktop PCs, laptops, tablets and mobile phones. So the deletion program needs to run on different operating systems and device types. It also needs to deal with solid state memory, which is harder to clean than a traditional hard drive.

Regenersis knows the software well – it was a customer of Blancco before it bought the business. Regenersis is a major repairer of electronic devices such as mobile phones and set-top boxes. When a broken device is replaced, it will repair and refurbish the original.

These ‘good as new’ smartphones give customers in emerging markets an affordable way of getting their hands on a device that would be out of financial reach when brand new.

But the previous owner’s data needs to be reliably erased for this to work. And in this, Blancco can make a cast-iron promise that its big-name clients find irresistible.

The 100% guarantee

A key part of the service is Blancco’s ability to issue a guarantee that it’s erased 100% of the data on a device. This creates a formal record for the customer that their data has been properly dealt with and protects them against litigation.

That’s led to Blancco being certified by such clients as the US Department of Defense, Nato and the internationally-recognised Common Criteria standard. Big corporate clients include Dell, Sony, KPMG and Deutsche Bank.

Judging by the confidence of these big-name clients, Blancco’s software seems to be of excellent standard. And it looks like the Finnish company has found a good new home, too.

Why? Well, Regenersis has lots of customers – so there should be plenty of cross-marketing opportunities and scope to integrate the service into the depots where it repairs kit.

And while data erasure is currently a relatively small part of the Regenersis business moment, it’s fast growing. As the laws on data security toughen up, we can expect to see a whole ‘data compliance’ industry develop.

The verdict

This recent acquisition of Blancco by Regenersis sets both companies up well to take on global data security. Regenersis gains an innovative company that already has a host of big-name clients and a solid industry reputation.

Meanwhile, the growing need for record keeping and evidence of data erasure will play right into Blancco’s hands – and its software could also grow well, now that it has access to Regenersis’ customer base.

Regenersis shares have cooled off recently after a strong run over the last few years – but I think they’re well worth keeping an eye on.

This article is taken from our FREE penny share investment email Penny Sleuth.
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Information in The Penny Sleuth is for general information only and is not intended to be relied upon by individual readers in making (or not making) specific investment decisions. The Penny Sleuth is an unregulated product published by Fleet Street Publications Ltd. Fleet Street Publications Ltd is authorised and regulated by the Financial Conduct Authority. FCA No 115234. http://www.fsa.gov.uk/register/home.do

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