Tag Archives: PIPCO

Expanded ‘IP CloseUp 30’ stock index features four new categories

Publicly traded patent licensing companies have significantly under-performed market indexes. Only a few of the original listed stocks remain. 

The IP CloseUp 30, a feature of this blog first published in 2013, was designed to provide IP investors a real-time snapshot of public patent licensing company performance and news.

Loss of patent certainty and value have made licensing less interesting to current equity investors. For that reason, the IP CloseUp 30 is evolving. It will be known as the IP CloseUp 50, and include several new categories of publicly traded, IP-focused businesses, including those that engage in brand and content licensing and defensive strategies.

The IP CloseUp 30 index is build on a Yahoo! Finance screen of earnings and other financial information —  stock price and market capitalization, as well as real-time news developments. It gives IP investors a efficient way to track relative performance of selected companies. For those observers more dubious about the sector, but who are interested in keeping tabs on certain patent holders, it provides a method of tracking potential threats.

Evolving Universe

When I coined the acronym, PIPCO, six years ago, it referred to an expanding sector of public companies whose primary source of revenue was patent licensing and, by default, litigation. At the time patent values and damages were much higher and many respectable non-practicing entities (NPEs) held promise. Yet to be felt were the full impact of the America Invents Act, passed in 2012, and the effects of several major court decisions affecting injunctive relief and patent eligibility.

Leading Brands Category

The IP CloseUp 50 is an alternative method for investors to track the influence if not impact of intellectual property. It introduces a larger context for considering IP performance. Patent monetization remains a viable business model for some owners, but perhaps for most businesses, less so as a public one with the pressure to provide investors with quarterly results.

The IPCU 50 is far from definitive and will require that companies be added and removed as market and IP conditions warrant. PIPCOs were never intended to be just about patent licensing. When damages awards for mobile telephony (Motorola, Nortel, et al.) and other technologies commanded hundreds of millions if not billions of dollars, it was only natural for licensing companies to become a source or investor fascination. But even at their most active these PIPCOs rarely generated much daily volume or market capitalization.

Enter PIPCO 2.0

If investors have learned one thing over the past decade about public IP companies it is that they are not synonymous with patent licensing. It is true that performance measures like licensing, settlements and public awards are easier to follow than return on risk mitigation or brand equity. Licensing and litigation are simply more graphic, especially if big tech companies are paying out.

Think of the IPCU 50 as IP CloseUp 2.0. It represents the next iteration of IP investment perspective – companies better equipped to adapt and survive because of their nature of their IP assets and their size. It includes patent, trademark and content-focused operating businesses where licensing may play a role in performance. The index will still consider leading patent licensing companies, but scale back the number. (For now, the index will not consider trade secrets directly.)

To be sure, the IPCU 50 is a work in progress, destined to be refined, but, nonetheless, provocative and worthy of periodic scrutiny.

The new IP CloseUp 50 categories:

  • Patents – Technology
  • Patents – Pharmaceuticals
  • Trademarks – Leading Brands
  • Media & Content Owners (Copyright)
  • Primarily Patent Licensing

Fuller Grasp

Using IP rights to mitigate risk and maintain market share is not new. Nor is brand or content licensing. In principle, using IP rights defensively does not necessarily diminish their significance. It is true that specific tech patents typically mean more to small businesses and individuals than to established players who can rely on other resources like brand equity and their ability to raise capital, and are unlikely to enforce infringed patents. A fuller grasp of what different types of IP mean to various businesses can quickly turn a seller into a buyer (and vice versa).

With some 85% or more of S&P 500 company value tied up in intangibles assets such as IP rights, shareholders need to be better informed about the use of and return on IP (call it, ROIP) and their role in performance. Questions investors should be asking, even if senior management and equity analysts are reluctant to:

  • Which are the most IP-rich businesses?
  • What rights do they own?
  • How are they being used?
  • What is the relationship of their IP to performance and shareholder value?

 

Work in Progress

To be meaningful the IP CloseUp 50 must change to reflect IP value and investor need. The businesses were initially selected by an informal panel of experts. We will do our best to accommodate requests to add or delete companies. The index is designed to render performance of IP-rich companies somewhat more transparent and easier to follow.

The IP CloseUp 50 looks at top public IP holders primarily by:

 

  • Size, type and quality of IP portfolio and assets
  • Enterprise market value (typically >$500M)
  • Innovation reputation

For further explanation of the five sections and criteria for inclusion, visit the IP CloseUp 50 landing page, here. Consider bookmarking it or placing it on your home screen or desktop.

 

Image source: yahoo! finance; ipcloseup.com

PIPX patent licensing company index beat the S&P 500 in the 2Q

The PIPX Index of 14 of the larger publicly held patent licensing companies rose by 2.1% for the second quarter 2015, beating the S&P 500 Index.

Similar to some other indexes, the PIPX is heavily weighted by the market value of those companies included, and was able to out-performed the S&P 500 Index, which was down .2% based on the leaders. The biggest movers for the 2Q were RPX, up 17.4% and Rambus up 15.2%.

2Q 2015 Fig 2-page-001

Over the past four quarters or 12 months, Tessera is the biggest winner, up an impressive 72%. InterDigital was ahead 19%, while the 12 other companies in the PIPX were all either flat or down for the period, confirming the recent pressure on PIPCOs. The S&P 500 Index managed to move up 5.2%.

2Q 2015 Fig 3-page-001

Equity investors seem to be telling patent licensing companies that they prefer company size, portfolio breadth and patent quality. Investors also appear to be gravitating to licensing businesses with more predictable cash flows, no easy feat after Alice and inter partes reviews.

For the full PIPX report, including performance dating back to July 1, 2011, just after the Nortel sale to Rockstar, go here.

Image source: Freescale Semiconductor, Dr. Kevin Klein

Patent Stock Review Aims to Help Investors Compare IP Companies

News aggregator serves up a convenient summary of developments in the public patent space.

Patent Stock Review, a news and analysis website started earlier this year, provides easy to access background on a wide range of public companies involved in patent monetization, including Vringo, VirnetX and Acacia, as well as many that are less well-known.

Published by Institutional Analyst, Inc.(AIA), an investment research firm founded in 1998 by Roland Rick Perry an editor, part-time analyst and investor communications consultant. Mr. Perry is responsible for launching the Internet Stock Review, and also provides coverage for companies in a number of distinct industries including, Biotech, Internet, Entertainment, Restaurants, Special Situations and Private Equity.

Patent Stock Review is not rocket science, but it is very useful. Like many good ideas, it compels a reader to ask, “Now, why didn’t I think of that?”  With its evolving core Watch List, it is a well-timed addition to the public IP company (or PIPCO) information space. Particularly useful are the latest blog posts and most popular blog posts, which provide insight into what people are saying. 

“The Watch List, was created as a starting point for investors who are interested in companies involved in Patent Monetization via internally held patents, patent portfolios or through the acquisition of potentially valuable TurtlesSharkslpatents,” says Mr. Perry. “The list is not a buy list, but rather our universe of companies, whose technology, management, patent portfolio and/or recent market performance we currently find compelling.”

Mr. Perry started Institutional Analyst, the predecessor to IAI,  in 1995. Earlier in his career he was a broker at Drexel Burnham Lambert. While most of the companies he updates are not his clients, Mr. Perry says that to align IAI’s with shareholders, he “seeks to have 90% of clients’ retainer represented by an equity stake.”  The Patent Stock Review is a wholly owned subsidiary of a public relations firm Institutional Analyst Inc. (IAI), which provides or creates coverage for publicly traded companies.

Voyage of Discovery

“The impetus behind the Watch List issuance is to bring attention to the names and/or to the existence of these companies, particularly those with no coverage on Wall Street,” continues Mr. Perry, “and then to have the investors themselves, do the due diligence necessary to decide on their own if any of the companies warrant further study and/or investment.”

The website provides individual news feeds for each company on the Watch List, enabling investors to easily follow the entire group with a single visit. Through Thomson Financial, the Patent Stock Review’s hard copy research reports are made available to more than 22,000  institutional money management firms and over 950 research firms including brokers, investment banks and independent research firms.

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Look for expanded PIPCO 30 list in a future IP CloseUp.

Image source: patentstockanalyst.com


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