Tag Archives: Finjan

“Turn and face the strange” – Patent values fall to earth; PIPCOs, too

Changes, or should we say “ch-ch-changes,” channeling David Bowie, who reinvented himself repeatedly, have decimated the performance of most publicly held patent licensing companies.

Public IP licensing companies (PIPCOs) are changing their names and restructuring in an attempt to reframe themselves. The move appears part of an effort to shed the past, given that many of these businesses have significantly under-performed the S&P 500 Index.

With patent values at historic lows, a fresh perspective is welcome. But can PIPCOs turn the corner and successfully adapt to changing times (and valuations) in the patent space? Only some are likely to succeed.

A fuller discussion of public IP companies, “PIPCOs adapt to ch-changing times,” can be found in my “Intangible Investor” column in the September IAM magazine, out today. Subscribers can find the piece here. It includes companies that have changed their name or issued reverse splits of their stock. or otherwise reinvented themselves as operating companies with product sales.

A Closer Look

A closer look at the IP CloseUp 30 reveals several significant developments. One trend which financial analysts tend to question is rebranding; another is a reverse split, where a $0.50 stock can suddenly become a $4 one when investors are provided with fewer shares at a higher price.

To casual observers, it can appear that performance has taken off, when in fact the weak stock price is merely being obscured by a diminished public float. Many PIPCOs were formed by a merging a private enterprise into a public shell, which while not disreputable, often comes with baggage.

While one can appreciate different patent strategies – the need to monetize good assets through different business models – the perils of public ownership are ill-suited for the majority of companies whose primary focus is licensing.

Still, there are public and private patent licensing company successes, including Finjan, which has successfully fended off multiple IPRs, Network-1, inventor-owned PMC (Personalized Media Communications), which continues to license, and colleges like Northwestern and NYU, which have scored big on pharmaceutical licensing.  

Stanford University’s patent licensing take in shares of Google are said to be worth more than $300 million.

Image source: wikipedia.org

PIPX IP stock index down 8.7% in Q1 after being up 11.2% and 20.4%

The PIPX public IP licensing company stock index came back down to earth in the first quarter of 2017. 

For Q1 the PIPX index was down 8.7% after being up  11.2% and 20.4% in Q3 and Q4 2016. This compares to an up 5.5% quarter for the S&P 500.

The change in value of the component companies over Q4, range from 61.4% for Wi-Lan (WILN) to -40.7 for Marathon (MARA), Xperi (XPER) (formerly Teserra) experienced a 23.2% decline in its share. Finjan (FNJN), whose market cap does not currently qualify it for the Index, and sells cybersecurity products as well as engages in patent licensing, was 54% in the quarter.

Fewer companies are now responsible for the bulk of the performance, as size becomes even greater factor in this capitalization-weighted index and as the value of some companies lags.

After outperforming the S&P 500 in Q3 and Q4 2016, Q1 saw the PIPX decrease, but not as dramatically as in previous quarters. The value of $1 invested in the S&P 500 in Q3 2011 would now be $1.76 while the value of the same $1 invested in the PIPX would be $0.69.

Q1, gains in RPX (RPXC), which named a new CEO, and Wi-Lan shares represented substantially all the positive movement in the index, and was heavily outweighed by large decreases in valuation at Acacia (ACTG), Rambus (RMBS), InterDigital (IDCC), and Xperi carrying the index to a substantial loss.

InterDigital, Xperi, and Rambus continue to make up the lions share of the index because of their market cap,” said Dr. Kevin Klein, Vice President and GM of Products and Licensing at VORAGO Technologies, who compiled the IP stock performance data for IP CloseUp.

“These three companies accounted for 37% of the total value of the index at the inception in 2011, today they make up over 80% of the total value of the index. InterDigital alone now accounts for over 40%, up from 15% at inception.”

Quarterly PIPX Performance, 2011-2017

For the full Q1 PIPX report, go here.

Image source: PIPX IP Stock Index

 

PIPCO stocks soar in a surprising first half for the second quarter

In what some patent holders are hoping will be a harbinger of things to come, publicly traded IP licensing companies are enjoying an unusually strong second quarter.

Year to date performance for some of the key players include Marathon (MARA), up 40.62% as of the close of the market on May 17. This is as the S&P 500 performance has dwindled to a mere .16% YTD.

MGT Capital Investments (MGT) is up an astounding 1,704.35%, in part because cybersecurity pioneer, John McAfee, is about to be named CEO.

“Until stock-featrecently, relentlessly negative information about patents and holders has been a challenge to patent licensing and sales activity,” one analyst observed.

“It may finally be hitting opcos and the courts that not only are there opportunities out there for amiable transactions that benefit all parties and avoid disputes, but an asymmetric market for patent transactions that depresses value is potentially very dangerous for everyone.”

Others performers were Inventergy (INTV), up 14.91%, Finjan (FNJN), ups 19.13% and WiLAN (WILN), which has risen an impressive 95.4% since January 1.

Not all PIPCOs have performed well. Stalwart RPX (RPXC) was down 17.82% and Spherix (SPEX) was down 24.56%.

Improving Conditions

The stock performance is a result of a diverse contributions, including $10 million in financing for Finjan, and $25 million settlement for Marathon from Apple.

Additionally, the courts have been ruling more favorably for patent enforcers, including increasing the likelihood of wilfulness. The Patent Trial and Appeal Board (PTAB) is showing some signs of acting more fairly, too.ipcu30-blurb2-21

Operating company patent acquisition activities have increased, too, in a sign that we may have hit a bottom and patent values will be creeping up if they have not already.

For a more complete list of PIPCOs and their recent performance, visit the IP CloseUp 30® here.

Image source: 3dprinting.com


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