Tag Archives: PIPCOs
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Record 20.4% move in 3Q for Public IP company stock index (PIPX)

Public IP licensing companies (PIPCOs) are very much alive and some company shares are doing surprisingly well, despite increased obstacles to patent licensing.  

PIPX reported a 20.4% gain for the 3Q vs. just 3.3% for the S&P 500.

It was the PIPX’s best performance since the index began tracking IP licensing companies in 2011. The PIPX is a capitalization-weighted, price-return measure of the change in value of this segment of publicly traded companies.

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“InterDigital and Tessera, comparative giants in market value, were responsible for 20% of the index move,” said Dr. Kevin Klein, Vice President and GM of Products and Licensing at VORAGO Technologies, who compiles the data. “Acacia was the biggest individual gainer, up 48.2%; WiLAN was the biggest loser, down 39.4%. ”

High Volatility

It is difficult to attribute any one specific factor to the record quarter. However, PIPX has been volatile, and somewhat counter-cyclical since its inception. The index could be seen as a hedge against S&P 500 performance. Additionally, patent licensing and sales have started to come back, and patent damages awards are being paid, although at reduced amounts.

The Patent Trial and Appeal Board has been instituting fewer Inter Partes Reviews (down to about one-third of petitions filed), but is still seen by many as a somewhat arbitrary impediment to patent licensing and enforcement.

The value of $1 invested in the S&P 500 in Q3 2011 would now be worth $1.62 while the value of the same $1 invested in the PIPX would be $0.68.

PIPX Performance by Quarter 

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Added to the index is FORM Holdings (NASADQ: FH), a diversified holding company that specializes in identifying, investing in and developing companies with superior growth potential. Removed were Vringo, which was absorbed by FORM Holdings, and Unwired Planet, which was delisted on June 18.

For the full 3Q report, go here.

Image source: PIPX Public IP Index

Q2 2016 Figure 2

Shares of patent licensing cos were off in 2Q after a torrid start to year

After a record-breaking first quarter, public IP company shares (PIPCOs) under-performed most stocks versus the S&P 500 index in the second quarter.

Following a five-year leading return of 13.1%, vs. 0.8% for the S&P 500, the PIPX IP Sector Index of 13 patent licensing stocks fell in the second quarter -4.4% vs. a 1.9% gain the broader market index.

Bucking the trend was Marathon Patent Group (MARA), which was up 37.7% on settlement activity. Despite and increase in its shares of 16.1% in the second quarter, Acacia Research (ACTG) is rumored to be exploring combining with a pre-IPO business because of the difficult environment for patent licensing.

“Acacia may acquire a pre-IPO business, allow struggling IP business to wind down, former employees say.” reports the Patent Investor.

Q2 2016 Figure 2

“The value of $1 invested in the S&P 500 in Q3 2011 would now be $1.57 while the value of the same $1 invested in the PIPX would be $0.56,” says Dr. Kevin Klein, who compiles the PIPX for IP CloseUp,”

Q1 2016 Fig 2

Unwired Planet (UPIP) was the PIPX worst performer, down 32.3%. On April 7, UPIP announced that it was divesting its patent licensing business. 

The PIPX IP Sector Index is a capitalization-weighted, price-return measure of the change in value of this segment of publicly traded companies. This means that the performance of larger companies like InterDigital, Rambus and Tessera have a proportionately larger impact on overall index performance than swings in smaller public company shares followed.

For the full PIPX Index report for the 2Q, go here.

Q2 2016 Figure 3

Image source: PIPX IP Sector Index

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Patent licensing index significantly outperformed the S&P 500 in Q1

The eagerly sought bottom for publicly traded patent licensing companies may have been reached according to the data provided by an intellectual property index that tracks stock performance.

The PIPX public IP licensing index was up 13.1% vs. a barely positive 0.8% for the S&P 500 in the first quarter of 2016. This was the best quarter for the PIPX since it began tracking public IP licensing companies back in July 2011.

Rebound or Bounce?

Is this merely a “dead cat” bounce from PIPCOs (public IP licensing companies) having been beaten down over many quarters? Do the results reflect the relative strength of a few large players?

Or is the sector actually rebounding from over-correction which has devalued many good patents? From this observer’s perspective, it is too soon to tell.

The S&P has dramatically outperformed the PIPX since the IP index’s inception, almost five years ago, when patent values were at a record high. Exceptions have been the second and fourth quarters of 2014 (see graph below).

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“The change in value of the component companies (below), ranging from +78.6% for Virnetx to -34.4% for Vringo,” said Dr. Kevin Klein, Vice President and General Manager of Products and Licensing at Vorago Technologies, a semiconductor company. “Parkervision (1:10) and Unwired Planet (1:12) had reverse stock splits this quarter. Vringo effected a reverse 1:10 stock split in Q4. Prices and valuations are adjusted to reflect these splits.”

Market Cap Weighted

The PIPX is a capitalization-weighted, price-return measure of the change in value of a segment of publicly traded companies. The performance of more highly valued companies, such as InterDigital (IDCC), Rambus (RMBS) and WiLAN (WILN) in the first quarter had the greatest positive impact on the overall index. The PIPX was brought down less strongly by the poor performance of by Acacia, Neonode, Vringo and Unwired Planet, whose market cap have shrunk.

Many of those who follow PIPCOs do so in conjunction with the IP CloseUp 30®, a real-time index of individual company performance in this sector, which also provides up-to-the minute news and updates. Readers also can quickly find market capitalization information there. The URL can be copied and placed on your home screen or home page.

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The PIPX index is designed to provide a measure of the market value, and hence a reading of the relative health of the publicly traded intellectual property licensing sector. The index consists of 13 companies with a primary focus of licensing and enforcement of patent intellectual property.

In addition to a focus on intellectual property, the companies must be publicly traded and have a market capitalization greater than $100M. Since being added to the index, the market caps of many of the companies have shrunk below $100M. The index was initiated with a value of 100 on July 1, 2011.

For the full PIPX Intellectual Property Sector Index Q1 2016 update, go here.

Image source: PIPX Index

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IP Dealmakers Forum will host 200+ patent monetization bigs in NY

The second annual IP Dealmakers Forum, December 7 – 8, will bring together leaders from the finance, legal and business communities to discuss the issues affecting patent licensing, sales and value, and to facilitate transactions.

New this year is a separate workshop for institutional investors that focuses on understanding IP as an asset class. This invitation-only, closed-door workshop will address the characteristics, market size and scope of patents as business assets, discuss practical investment issues, and examine the current investment universe. For additional information, go to here.

Luncheon Keynote

This year’s luncheon keynote is Edward Jung, co-founder and Chief Technology Officer of Intellectual Ventures, which holds more than 70,000 patents.  After leaving Microsoft where he was Chief Architect, Jung founded IV in 2002. As CTO, Jung sets strategic technology direction and new business models for the company. He holds more than 750 patents worldwide with has an additional 1,000 pending in the areas of biomedicine, computing, networking, energy, and material sciences.

The keynote topic is Driving Deals Through the Patent Storm”ip-dealmakers-logo-2015

Other speakers, at the New York event which will be held at the Apella event center overlooking the East River, include chief or senior executives from leading IP holders, both NPEs (non-practicing entities) and operating companies, institutional investors, financial institutions and PIPCOs (public IP licensing companies), including

France Brevets, Techquity, EverEdge IP, Finjan, Royal Philips, Gerchen Keller Capital, Fortress, IP Bridge, Northwater Capital, Wood Creek Capital, Allied Minds, WiLAN, American Express, nXn Partners, Bridgestone Americas, Swiss Alpha, Freescale Semiconductor, Ericsson and Marathon Patent Group.

For this year’s IPDF agenda and speakers, go here.

IP CloseUp readers can still save $200 on Forum registration by using promo code “IPCloseUp_Special”.  A special landing page has been created for IP CloseUp reader registration: http://www.ipdealmakersforum.com/ipcloseup/

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Actionable Insights 

“The program is dedicated to providing attendees with actionable insights from successful dealmakers,” says Wendy Chou, co-founder and producer of IP Dealmakers Forum. Session topics include:

  • Boom or Bust: The Public IP Market One Year Later
  • All About Patent Quality – How to Invest in Powerful Patents
  • New IP Businesses, Investing for Innovation & Growth
  • The Evolution of IP Litigation Funding & Insurance Markets
  • 2016 Presidential Election Perspectives on Patents
  • How IP Drives Corporate Reinvention, M&A and Investments

Last year’s inaugural event connected diverse intellectual property monetization experts with public and private market investors, and was attended by approximately 200 investors, IP executives, and advisors. Due to popular demand, expanded space will be provided in 2015 for private one-on-one meetings.

Changing Times

“These are changing times,” said Ashley Keller, co-founder of Gerchen Keller Capital, and a scheduled speaker at this year’s Forum. “As the market shifts, understanding the increased importance of due diligence expertise, the changing perceptions of risk and valuation, and the sources and expectations of those with investment capital, is a prerequisite for anyone who intends to succeed in this arena.”

Image source: IP Dealmakers Forum 

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Acacia shares off 20% on poorer than expected 3Q results

Acacia Research Corp. (NASDAQ: ACTG) was slammed in after-hours trading yesterday and is off 20% by noon today. The S&P 500 Index gained .66%.

The company reported that revenues were $12,994,000, as compared to $37,192,000 in the similar prior-year quarter. Its non-GAAP net loss was $11,458,000, or -$0.23 per diluted share, as compared to non-GAAP net income of $5,050,000, or $0.10 per diluted share.

The public IP licensing company, or PIPCO, reported revenue of $13 million in the period, which did not meet Street forecasts. Three analysts surveyed by Zacks expected $32.8 million.

Acacia Research shares have fallen 48 percent since the beginning of the year. In the final minutes of trading on Thursday, shares hit $8.79, aacacia_logo_lg fall of 42 percent in the last 12 months.

“Consistent with Acacia’s strategic shift towards a smaller number of higher valued marquee portfolios, our portfolio intake pipeline remains filled with deep and promising patents in the technology, automotive and energy verticals as inventors and companies seek out the best partner to navigate the increasingly complex patent licensing environment,” said Matthew Vella, Acacia Research Corporation CEO and President on today’s earnings call.

A transcript of today’s call can be found here.

Acacia’s third-quarter earnings release can be found here.

Image source: acaciaresearch.com

3Q 2015 Fig 2 (labeled)

PIPEX patent company index falls 15.4% for 3Q, double the S&P 500

The PIPEX intellectual property sector stock index fell more than twice as much as the S&P 500 as the effects of the Alice and IPRs, in combination with a correcting stock market, came into play. 

Rambus, while loosing 18.6% in the quarter, still has gained 6.4% Year-to-Date, largely as a result of excellent 1Q and 2Q performance. Tessera and InterDigital stock which performed well in 4Q 2014, has less steep YTD declines (see YTD graph below).

The PIPEX index was down 15.4% vs. the S&P 500 which was lost 6.9%, its biggest quarterly drop since 2011. Unwired Planet was up 17.7 % for the quarter and Acacia 3.5%. For the previous 12 months, Surprisingly, InterDigital and Tessera were the leaders for 12 months, up 27.1% and 21.9% respectively because of a strong 2014 4Q.

3Q 2015 Fig 2 (labeled)

The PIPEX, provided exclusively to IP CloseUp by Dr. Kevin Klein, VP of Licensing for Freescale Semiconductor, is a “capitalization‐weighted price‐return measure of the change in value of this segment
of publicly traded companies.” The Index is designed to provide a measure of the market value and health of the intellectual property licensing business as a whole, while making it easier to identify individual performance. The stock performance of larger companies have a much more significant impact on the Index than those of the less highly valued. (See Fig. 4 weighting graph.)

The thirteen companies in the index are all publicly traded and at one time had a market capitalization of $100M or higher. Private companies such as Intellectual Ventures, Conversant and IPNav are not included, nor are struggling micro-caps like Inventergy.  Fortress, which provides loans to patent holders and is part of a large financial organization, also is excluded.

Year-to-Date

Parkervision and Marathon shares are down the most YTD, 79.1% and 78% respectively. Marathon announced a merger with Uniloc on August 14, which current shareholders may see as a mixed blessing. Eight of the thirteen companies that make up the index saw 12 month declines >40%; four did YTD, indicating a possibly improving trend for shares of some companies.

3Q 2015 YTD (labeled)

Conclusion

It is difficult to say if PIPCOs have hit bottom yet and are ready to rise. Certainly, as they adapt to changes in patent law, recent court decisions and the PTAB, those with larger, well-vetted portfolios, cash and patience are in the best position to prosper. For better or worse IPRs and the PTAB are a fact of patent licensing life which these businesses must learn to contend.

For the full PIPEX 3Q 2015 report go here.

3Q 2015 Fig 4 (labeled)

Image source: The PIPEX Intellectual Property Sector Index 

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1Q + 2Q 2015 = downer for most PIPCOs; a few bright spots shine

Shares of public IP companies (PIPCOs) continued to fare poorly in the 2Q of 2015. The stock of companies with larger market capitalization tended to do better, and there were even a few whose shares were up significantly.

Just how bad was the first half of 2015 for PIPCOs? Pretty bad.

Through July 6 the S&P 500 Index was virtually flat, down just .51%. Patent licensing company losers YTD, however, include Spherix (SPEX), $.43, down 60.28%; Inventergy Global (INVT), $.39, off 50.29%; Marathon (MARA), $2.89, down 65.68%; Finjan (FNJN), $1.35, down 46.64%; Document Security Systems (DSS), $.29, off 35.51%; Unwired Planet (UPIP), $.61, off 38.8%; and VirnetX Holding Corp. (VHC), $4.22, off 23.13%.

CopyTele (now Itus, stock symbol ITUS), $.14 was up 27.27%. (Could a name change make a difference? I guess maybe if the stock barely trades and has a market value of $1M.)

Pendrell (PCO), which was down as much as 30% and up 5% since May, finished the first half of the year just a shade under flat.

[For a snapshot of individual PIPCO performance, including recent news, and a look at how they compare to each other, visit the recently updated IP CloseUp 30, here.]

Bigger Players

Of the bigger players Acacia (ACTG), $8.11, was down 52.13%; and WiLAN (WILN), $2.23, was down 25.42%. WiLAN with $93M in annual stock-market-predictions-2-300x199revenues and $118M in cash, appeared to stand a good chance of weathering the storm. Its shares pay a 7.1% dividend.

On the plus side: RPX Corporation (RPXC), $22.57, was up 22.57% year to date; InterDigital at $56.30 gained 6.43%; Tessera (TSRA), $37.75 was up 5.56%; and Rambus (RMBS) at $13.89, advanced 25.25%.

Perhaps the most outstanding performer of the group is licensing/ operating company Universal Display Corporation (OLED). It stood at $51.17, up an amazing 81.84% YTD. The flat panel display and solid state lighting company has 3,500 worldwide patents and applications and licenses to many leading electronics sellers, including Apple. It was founded by Sherwin Seligsohn, who was founder and Chairman of InterDigital 

Deals in the Works?

In a quarter-ending column by Richard Lloyd that ran on the IAM blog he speculated that there could be some deals in works as some of these licensing business wind down. “This blog and others in the market have been predicting for a while that there will be some sort of shake-up of the PIPCO sector,” Lloyd wrote, “be it consolidation through mergers or asset sales. But so far any signs of that shake-up have been limited to an approach by Marathon to Spherix (which was rebuffed) and the merger between Internet Patents Corporation and Prism Technologies. But, thanks to the continuing tough conditions, are we now approaching the point where we will start to see heightened activity?”

Inventergy could be delisted from Nasdaq as its share price has remained below $1. It has applied for an extension to remain on the exchange for a further six months. Vringo, ParkerVision and Spherix have all been granted extensions to remain on the NASDAQ in the first half of 2015.

Challenges Ahead

It will not be easy for PIPCOs to be acquired or otherwise merged with stronger players, nor will it be easy for them to sell off assets. One prominent CEO told me that he has been approached by several PIPCOs but that he does not see much value in merging or in acquiring potentially undervalued public licensing companies, even for stock. “Numerous encumbrances involving the patents and relationships with capital providers would need to be sorted out, and, frankly,” he said, “few of the assets are worth it.”

Image source: mt5.com; onlinesharetradingtips.in

Fig5

Leading IP stocks for 1Q include VRNG, RMBS, TSRA, VHC & RPXC

Despite a soft first quarter 2015 for the 13 IP licensing company stocks that comprise the PIPX IP Stock Index, versus the S&P 500, individual winners and losers that bucked the trend.

Vringo (VRNG), down 80.9% over the past 12 months, was up 18.2% in the quarter one, the most in the group. Also advancing were Rambus (RMBS) was up 13.4%, Tessera (TSRA) 12.6%, Virnetx (VHC)10.9% and RPX (RPXC) 4.4%.

Unwired Planet (UPIP), Acacia (ACTG) and Marathon (MARA) were down, 43.0%, 36.8% and 31.0% respectively for the quarter. For MARA it came after a stellar 2014 where it gained some 170%, so some profit-taking is not unexpected. InterDigital (IDC) also cooled off after a torrid 4Q 2014.

*****

PIPX under-performance relative to the S&P 500 was more muted in the first quarter. This appeared to be less a result of improving performance among PIPX sector companies as a group, than improved performance among a handful of larger Index leaders (Tessera and InderDigital), whose weighting impacted overall results (see final graph).  

Fig2
Vringo’s stock was beaten down significantly in the 2014 as the result of adverse decisions in court, so its gain is less impressive in relative terms. Its improved stock performance is either being considered by some investors as a positive harbinger, or the shares are enjoying a favorable bounce due more to traders than long-term investors.

The role of depressed patent values as a result of the American Invents Act, IPRs and proposed proposed additional anti-patent litigation legislation in poor PIPCO performance is difficult to determine. The likelihood is that investors are beginning to regard some companies as better capitalized and and more sufficiently equipped for the long hall, whatever the scenario.

Those larger players that appear to be in possession of sufficient numbers of good patents and licensing opportunities, appear to be the best position to perform over time.

*****

Fig3The PIPX Index, compiled exclusively for IP CloseUp by Dr. Kevin Klein, Director of IP Licensing at Freescale Semiconductor, is designed to provide a measure of the market value and health of the intellectual property licensing business. The index consists of 13 public companies all whose market capitalization exceeds $100M, whose primary focus of licensing and enforcement of patent intellectual property. The companies included in the index are listed in Table 1. Several of the companies’ market capitalization has fallen below $100M since being added to the index.

“The PIPX index starting from July 2011 through March 31, 2015,” says Dr. Klein. “Somewhat surprisingly, given the amount of interest and attention provided to IP licensing in recent years, the index trends down from July 2011 to about the middle of 2012 and from there has been relatively flat. This performance stands in contrast to that of the broader economy and of publicly traded companies in general.”

The 2015 1Q PIPX update can be found here.

Fig5

Image source: PIPX IP Sector Index, Q1 2015 Update

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A Few IP Stocks Shined in 2014; Most Declined, Some Significantly

Size helped in 2014 when it came to public IP licensing company stock performance, but it did not assure success.

As a group, the twelve companies in the PIPX Public IP Performance Index out-paced the S&P 500 for the 4Q 2014 9.1% to 4.4%, with Neonode, Tessera and InterDigital leading the way, all with 4Q gains in excess of 30%.  Marathon, under $100M in market cap for most of 2014 and not represented on the graph below, was up 17% for the quarter and 167% for the year.

2014PIPX4QFor the year 2014, however, companies in the index fare much worse, with PIPX companies generating a collective return of just 4.3% vs. 11.4% for the S&P 500. Tessera and InterDigital were notable performers each with 40% returns for the year. Rambus and Acacia were up about 17% each.

Eight of the twelve companies in the PIPX, which is provided to IP CloseUp by Dr. Kevin Klein of Freescale Semiconductor, were down, led by ParkerVision, VirnetX and Vringo. RPX was down 18.5% for the year and WiLAN 11.3%.

The PIPX is weighted by value or market capitalization, so poor performance by smaller companies has less of an overall impact on index performance.2014PIPXyr

Conclusions? 

It is difficult to draw too many conclusions from this, the first year of the PIPX. Investors tended to reward higher value stocks, but size was not a guarantee of performance, with RPX and others down against both the index and S&P 500.

It’s important to recognize that despite uncharacteristic pressure on patent values due to legislative reform and judicial decisions, good assets have continued to hold value. With the recent Rockstar settlements and sale of 4,000 patents to RPX, we could be at or near the pricing bottom, depending on the nature of 2015 patent reform.

A few small stocks bucked the trend, notably Marathon (MARA), which was not on the PIPX list because it was under $100M in market cap for most of the year. It is now at $110M and is being added. MARA ended the year up 167%. I’m pleased to say that Brody Berman Associates, my firm, helped to develop with the company’s early messaging.

Other companies not in the index performed poorly and their results can be readily tracked on he IP CloseUp 30 found here. (Paste the URL onto you home screen or desktop for easy, real-time monitoring of the public IP sector.)

Image source: Freescale Semiconductor

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Nine Companies in IP CloseUp 30 Index Fall Below $1/share

More than one-third of the IP CloseUp® 30 public patent licensing companies (or PIPCOs) are currently selling for less than or about $1 per share — Opportunity of red flag?

With the S&P 500 and other major market indices up slightly for the year, about as expected, PIPCOs continue to defy expectations both on the down and the up side.

As of mid-day December 17, nine IP CloseUp 30 companies are trading below $1 per share and two others are just barely above gold-bear-market-cnbcit. The laggards include Copytele, DSS, Hipcricket, Inventergy, MGT Capital, Opti, Inc., Paid, Inc., Single Touch, Unwired Planet and Vringo. Pendrell is at $1.27 and Spherix at 1.13, 2014 lows. VirnetX is down 75% for the year and Finjan 64%.

It remains to be seen whether 2015 investors will regard these stocks, beaten down by new patent laws and lackluster performance, as buy or sell opportunities.

Patent licensing stocks continuing to outperform the market by a wide margin are Tessera, Rambus, InterDigital, Marathon Patent Group and Acacia Technologies. Collectively these stocks are up well over 50% in 2014. Marathon is up 188%.

*****

ipcu30-blurb2-21Year end stock selling can be fueled by many things, including mutual funds that announce their mandatory distributions, typically in mid December. This year fund distributions have been particularly high because many have taken gains from previous years, including a huge 2013. Some investors sell to avoid the taxes passed on by funds. The plunge in oil prices is adding volatility as is the Fed’s suggested easing of economic support.

PIPCOs that have transcended the general public NPE stock trend appear to be well-positioned for 2015 and may benefit from proposed new patent legislation should it pass.

Image sources: ipcloseup.com; promotaka.com

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InterDigital and Tessera Soar in (for now) a Strong 4Q for Stocks

The stock market continues to defy expectations. Even more surprising, a few PIPCOs have dramatically outperformed it. Smaller cap patent stocks have not fared so well.  

A handful of patent licensing companies are poised to end 2014 on a resoundingly high note. Early indications are that InterDigital and Tessera Technologies are among those that have likely benefited from the positive momentum generated in the fourth quarter, fueled by a 67-month bull run.

With the S&P 500 up 11.44% at the close of trading on December 9, Tessera (NASDAQ: TSRA) is up 82.39% YTD, and most of that in the fourth quarter. It was up “only” 34.9% through the third quarter. (See TSRA’s performance through the third quarter in the Freescale chart below.)

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Unwired Planet (NASDAQ: UPIP) on the other hand is up 8% YTD after having been up 35.5% at the end of the third quarter, dropped dramatically in the fourth quarter. InterDigital (NASDAQ: IDCC),  up a respectable 35% at the end of the third quarter, is currently at 81% YTD. Another beneficiary of good tidings and market momentum. IDCC, TSRA and, to a lesser extent, Rambus (NASDAQ: RMBS), have been quietly generating credibility for patent licensing stocks. (In a future IP CloseUp we will be analyzing their largest investors.)

Many Nanocaps Suffer

Many of the nanocaps, PIPCOs whose market capitalization does not exceed 100M, continue to be down for the year and quarter. Some like ParkerVision, Vringo and VirnteX have been dragged down by adverse decisions in court. Others, like DSS and Inventergy have had difficulty showing they can turn patent licensing into a sustainable public business. Notably, IDCC, which ballooned to $75.72 on August 7, 2011, a five-year high, has steadily climbed back up to $53.39 after sinking as low as 25 on July 22, 2012. Some patent licensing stocks appear to be more resilient than others. Often that grit is based on (1) cash flow and (2) cash on the balance sheet. (Cash was king long before Lebron.) Stay tuned to see how the year will end for PIPCOs and which companies have been able to take advantage of the still running bull. Tessera

Image source: Freescale Semiconductor; Yahoo! Finance 

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Unwired Planet: Can Cash Position Cushion Long Sales Cycle?

With three recent Markman hearings and more than $100M in cash UPIP trading currently at $1.46 could be a good buy for those with patience and a strong stomach.

At an earnings call last Thursday Unwired Planet, Inc. (NASDAQ: UPIP)  CEO Philip Vachon reiterated his confidence in the future, and announced a renegotiated deal with Ericsson that will provide the company more flexibility going forward regarding patent transactions.

“With the modification of the Ericsson agreement during the [past] quarter, the company now has the option to acquire assets that are not subject to the Ericsson revenue share agreement,” Vachon told investors,”but that are subject to the $1.7 million of our NOL.”

Lake Street Capital senior equity analyst Mark Argento who has a “Buy” recommendation on UPIP, suggests that investors proceed with caution, but sees a $5.00 price target.logo

Sum of Parts Valuation – “Given the nature of its business model and the lack of revenue and operating profit predictability from a modeling perspective,” says Argento,” “we believe valuing UPIP on a project/IP portfolio sum of parts valuation basis is most appropriate. We take various scenarios: Low, Mid, and High range of outcomes for monetizing both its core UPIP portfolio and the wireless infrastructure portfolio acquired from Ericsson.”

Argento’s list of “Valuation” challenges and “Risks” in his report (linked above) provide useful guidance for anyone interested in public IP licensing sector.

Spend and Wait

Unwired Planet is typical of the frustrations faced by many PIPCOs that own good patents but have to spend time and money, and encounter risk, to monetize them.

Spending on legal fees and acquisition costs, without generating significant income, requires a strong constitution, even when there is cash on the balance sheet and burn rate that can be contained. Not every PIPCO is so lucky.

Image source: unwiredplanet.com; lakestreetcapital.com

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