Uptick in Police Surveillance Tech Sparks New Opportunity

February 16, 2017

By WallStreetDaily.com Uptick in Police Surveillance Tech Sparks New Opportunity

Louis BaseneseTo some people, few things are more violating than government surveillance.

But with tracking down criminals getting harder than ever, local police are getting desperate.

Sometimes that involves taking matters into their own hands and loading up on NSA-style tech.

One spy device in their arsenal is a computer that can impersonate a cellphone tower. So it can be used to locate and infiltrate a mobile device.

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That might sound like a blatant invasion of privacy. Rest assured, however, the state appeals court ruled this kind of spying illegal without a warrant in 2016.

But that’s not the most disturbing tech at police disposal.

One local government just paid a small fortune for an even more powerful spy tool.

Wall Street Daily Senior Analyst Jonathan Rodriguez breaks down these controversial — and highly investable — technologies below.

Local PD Goes Full-NSA to Catch the Bad Guys

Louis BaseneseIn a world where technology advancements outpace law enforcement, police around the world are struggling mightily to nab criminals.

Using encrypted computers, mobile phones — even using currencies like Bitcoin to do business under the radar — criminals are savvier than ever before.

Tired of being burned by the bad guys, police departments have invested big money into high-end spy gear.

Not James Bond gadgets, necessarily. But certainly the kind of stuff typically reserved for agencies like the NSA and the FBI.

For instance, the Baltimore City Police Department bought a cell-site simulator nearly a decade ago and used it — secretly — in at least 837 investigations, according to a USA Today report.

If you’re unfamiliar, this device — called the Stingray — tricks a cellphone into thinking it’s communicating with a real tower.

Once they’ve connected, authorities can record all the phone’s data transmission — audio, visual and internet data packets.

Using little more than a van, a laptop and the Stingray device, police can find and track a phone’s location accurately to within a few feet.

Just further north, CityLab reported that the Baltimore County Police Department purchased an even more sophisticated simulator.

The official transaction was redacted, but they were widely assumed to have purchased a “Dirt Box.”

The “Dirt Box” is a long-range cell-site simulator that can be mounted to a helicopter for increased mobility.

But there’s a catch… these devices are not precision-minded tools.

Police sweep in hundreds of unrelated cellphone signals with each scan, filtering out the signal they want.

This means that on the hunt for a suspect, an ordinary citizen’s cellphone could be under surveillance.

Still, police argue this could be the only way to catch the most tech-savvy criminals on the move.

And that’s not even the furthest they’re willing to go…

Phone Passwords Cracked Like an Egg

Baltimore City PD also has what’s called a Universal Forensics Extraction Device, or UFED.

Built by Israel-based tech security firm Cellebrite, this tool connects to a phone and — using proprietary techniques — unlocks the device.

Once the UFED has unlocked the cellphone, police can extract not just the data stored on the phone, but private cloud-based data, too.

This device is rumored to have been used by the FBI to crack the iPhone of San Bernardino shooter Syed Farook — the same phone that Apple Inc. famously refused to unlock in 2015.

The UFED isn’t cheap, either. They start at a mere $6,000.

Between 2008 and 2011, the Baltimore City police department spent just over $300,000 on cellphone surveillance tools alone, according to CityLab. And the Baltimore County PD shelled out $135,000 on their spy stuff.

Between those two jurisdictions, that’s nearly a half million dollars for the surveillance of 1.4 million people.

Like it or lump it, folks, this spy tech isn’t going anywhere.

In fact, CityLab reports that 27 individual police departments have already sprung for these tools. And the list grows by the day.

Here’s how you can invest in these highly coveted spy tools…

Cash in on the Spy Game

The Stingray cellphone simulator is made by defense tech giant Harris Corp. (HRS).

Over the last five years, the company’s stock has gained 146% excluding dividends — more than twice the gain of the S&P 500 over that span.

Harris has many defense contracts around the world and a growing list of Stingray clients. But with a market cap of $13 billion — Harris doesn’t represent a high-growth opportunity.

However, UFED maker Cellebrite is owned by Japanese tech conglomerate Sun Corp. (6736.T), which trades on the Tokyo Stock Exchange.

Sun Corp. sports a market cap of ¥17.3 billion, or $152.6 million— equivalent to a microcap stock here in the States.

Since 2012, the company’s shares are up 307% — nine times the gain of the iShares MSCI Japan ETF (EWJ) over the same period.

And the stock still trades for less than $7 on the Tokyo Stock Exchange.

Bottom line: If you’re looking to cash in on the next explosive growth phase of high-tech spy gear, look no further than Cellebrite owner Sun Corp.

On the hunt,

Jonathan Rodriguez
Senior Analyst, Wall Street Daily

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