Tag Archives: PIPX Intellectual Property Stock Index

InterDigital leads PIPX public IP stock index to a 44.9% gain for 2016

The PIPX public IP licensing company stock index soared to a 44.9% increase in 2016, led by an impressive 86.3% move for InterDigital.

With a market capital in excess of $3 billion, InterDigtal (IDCC) led the value weighted PIPX with another stellar performance.  Poor performers for the year included Neonode (-27.3%, NEON), ParkerVision (-20.0%, PRKR) and VirnetX (-14.4%, VHC), who made less of a dent in overall PIPX performance because of their lack of market value. The S&P 500 stock index for the year was up 9.5%, a significant portion in the 4Q following November’s presidential election.

“For Q4 the PIPX index was up 11.2% after a remarkable 20.4% in Q3,” noted Dr. Kevin Klein, Vice President and GM of Products and Licensing at VORAGO Technologies, who compiled the IP stock performance data for IP CloseUp. “Pendrell underwent a reverse 1:10 split during Q4, as have several other of the smaller companies in the index, another example of the their shrinking share price and market capitalization.”

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The imminent departure of President Obama, an advocate of weaker patents, and the election of Donald Trump, a strong supporter of proprietary content and brand, also may have had something to do with strong 4Q performance for the PIPX.

Despite the over all gains for year and quarter, Marathon (MARA) and ParkerVision were down 38.8% and 56.3% respectively in the 4Q, and were up 7.5% and down 20.0% for the year. Litigation developments were likely influences.

For both the year and 4Q, performance for InterDigital Tessera (TSRA) and Acacia (ACTG) accounted for all the PIPX gain and offset some of the losses from the smaller component companies.

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“InterDigital, Tessera, and Rambus (RMBS) continue to drive the recent growth in the index and make up an ever-increasing share of the index,” stated Dr. Klein. “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.”

Change in value of PIPX component companies 2011-2016

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Five Years of Data

After more than five full years of tracking, the PIPX seems to be suggesting that a handful of strong IP licensing companies are getting stronger and the weaker (smaller) ones are becoming more volatile.

For the full 2016 and 4Q PIPX report, go here.

 Image source: PIPX IP Stock Index

 

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

Public patent licensing company index declined 24.4% in 2015

While the S&P 500 stock market index was up 6.5% for the 4Q 2015, the PIPX (public IP licensing company index) was down 11%. 

2015 results were worse with the PIPX down 24.4% vs. the S&P 500, which declined 0.7%. The poor performance is attributed to the weakening of patents and patent values, and the increase in uncertainty, as a result of the American Invents Act (AIA) and several major court cases, including Alice v. CLS Bank.

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Marathon (MARA) and Acacia (ACTG) performed particularly poorly in 2015, down 81% and 74.7% respectively. Rambus (RMBS) was the only gainer in the group, up 4.5% for the year.

For the fourth quarter, ParkerVision (PRKR) and Unwired Planet (UPIP), up 21.1% and 17.8%, both outperformed the solid S&P 500 results of 6.5%.

The PIPX is a capitalization-weighted, price-return measure of the change in value of this segment of publicly traded companies. The performance of more highly valued companies, such as InterDigital (IDCC), Universal Display (OLED), has a more significant impact on the overall index.

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Many of those who follow public IP licensing companies (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 updates.

The PIPX index, created by Dr. Kevin Klein, former Director of IP Licensing at Freescale Semiconductor, 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 Q4 2015 update, go here.

Image source: PIPX Index

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.

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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).  

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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.

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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.

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Image source: PIPX IP Sector Index, Q1 2015 Update


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