Vringo (AMEX: VRNG): The Big “D” is Imminent

I thought it might be a nice sleepy summer for VRNG, and we could accumulate the stock in the mid $3 range. We will hopefully see it down there again soon, so you can pick it up at a more reasonable level. The stock was up there close to $4.50 yesterday, but today closed at the $3.72 level- so we are headed the right way if you don’t own it.

Back on July 19th VRNG closed its acquisition of Innovate/Protect- which means it’s game on as VRNG goes to court, armed with all the old Lycos technologies in its IP portfolio. In its SEC filings, VRNG describes the transaction as a “reverse merger”- meaning the assets and business of Innovate/Protect now become the primary direction of VRNG. That business is the business of suing the likes of Google, AOL, Target, and a few other giant names. Innovate/Protect owns all the assets of the old Lycos- one of the early stage search engines.

To me, it was rather amazing the stock traded so well in light of this week’s news. The only positive news related to new director Donald Stout- now Chairman of VRNG’s intellectual property committee.

This past week, Stout has become a true David taking down several Goliaths. NTP inc is a company cofounded by Stout- unrelated to VRNG.

However, this past week NTP was richly rewarded after several years of patent infringement battles appeared to pay off big time.

NTP settled with AT&T, Verizon Wireless, Sprint, and T-Mobile- NTP is still going after smart phone manufacturers Apple, Motorola, Palm, LG Electronics, and Samsung.

While the terms of the settlement were undisclosed, the market loved it in the face of some negative news out of VRNG, and bid the stock up to $4.29 on huge volume (7 million shares Tuesday).

Modern day David took down these Goliaths with their massive legal teams- but the true outcome remains unknown. One might assume Stout has earned a gigantic pay day for his efforts. The market certainly did.

I believe this week’s surge will prove short lived as there have been some major negatives this week as well- all related to the Big “D”- D for DILUTION. At some point in the future the public float of VRNG will inevitably be much larger- meaning the stock will become far more cumbersome in terms of moving up the charts.

The other developments this week include the following:

  • VRNG issued approximately 51 million shares in the form of common stock, convertible preferred, and warrants to acquire Innovate/Protect. Formerly boasting a very manageable 14 million shares I&O, it has now ballooned to about 65 million or more fully diluted.
  • VRNG also filed a “shelf registration” to raise $100 million. This means the company will eventually be able to sell any combination of common, preferred, debt, warrants, rights, purchase contracts, or units to raise a maximum of $100 million in any form it wants at any price it wants. Since whatever form any capital takes will somehow end up as free trading shares as soon as funded at whatever price the company deems, this registration statement represents an ominous technical black cloud which could hang over this stock for sometime to come.

In the September/October time frame, Innovate/Protect’s case will be moving to the next stages. This is when I expect the story to really heat up.

In a best case scenario, I expect the stock could be worth about $10 with this new dilution coming into the picture. I’ve read forecasts of $30 per share, which would imply a $2 billion market cap- that’s without raising the $100 million they filed for this week.

Add in the potential $100 million that will certainly take some form of massive dilution, and the picture becomes even murkier.

I still believe this stock should be owned. The market sometimes has the ability to wear blinders when it comes to explosive upside potential- as we have here.

I’m no lawyer, but I know one who’s following the story. These law suits will not likely be worth $2 billion- probably something more like $500 million at best.

My suggestion- accumulate on dips into the $3.25 to $3.50 range.

At present- I’m not a shareholder, just an interested party. I’ll be looking at some call options if the stock trades off.


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Regency Resource (RSRS): Technically Tasty

Wow: Zero To Hero In Two Weeks

It’s been a bit of a dry spell lately, with a few of my ideas backing up this year and generating losses. That’s the nature of penny stock investing- when you’re hot, you’re really hot. When you’re cold, it seems like winter in Alaska. You might have thought I couldn’t hit my backside with a tennis racquet. So, just when you least expect it….BOOM

On Vringo (AMEX: VRNG)- if you’re a trader, you should take profits. If you own it from my original call of $1.25 a year ago, last Fall at $1.20, or two weeks ago in the mid $2 range, you should be up anywhere from 220% to 60%. In either case, the stock gets hot when news drives it up, and drifts down when it’s quiet. With Monday’s huge gap up on the Mark Cuban news, it’s time to lock in gains and reacquire when it quiets down. The stock will likely fill the gap and head back to $3.

The response to my Luxeyard (OTC BB: LUXR) idea has been overwhelming. I suggested the short term price target of $1- a 25% gain in a few days. Yesterday the stock closed at $1.19 on 3.6 million shares of volume. A new high for both price and volume. Investors love this one. That’s a 50% gain in the first 5 trading days, which I’m of course very pleased about.

LUXR is just getting started, but it’s not going to rocket up like this everyday. As I’ve disclosed, I have a very large position in both free trading shares and restricted shares, all picked up with my own money. I’ve liquidated a small percentage of shares into this rally, but technically the stock sure looks like it wants to go higher. I have the restricted shares for my long term position, so I’m not afraid to lose a little into this frenzy.

If you’ve been watching, you might want to wait for a pullback to get involved. I don’t know. I could be $1.50 today, or it could be $1. Either way, a short term gigantic win for OTC Journal members.

If you missed my interview with the Chairman of Luxeyard on the BigBizShow on Monday morning, just go to www.otcjournal.com, and hit the play button on the video window whenever you’d like.

Penny stocks are very hot right now. I’m looking for technical breakouts, and watching a couple of names. If you’re looking for a good trade, here’s one you can check out right now. Big volume has appeared out of nowhere, and this one might be just getting started.

Read on………

Regency Resources (OTC BB: RSRS): Technically Tasty

Another one is blowing up out of nowhere. I’m a huge fan of the new direction for digital technologies. Consider my last few ideas: iTrackr (IRYS)- despite it not working out; Vringo (VRNG)- a giant win that helps you watch your cell phone ring; and Luxeyard (LUXR)- the new frontier of digital shopping and a giant short term win.

So, when I see a heretofore unknown and unfollwed stock explode with volume after announcing they are acquring a company that is building out media for delivering content to the next generation of Internet TV, it gets my attention.

3D TV did not take off. I don’t think people really cared about having their TV in 3D- I mean, after all, the Hi Def picture we get now is so fantastic there wasn’t enough incentive to switch your TV out.

However, I can’t tell you how many times I wished I could browse on my TV. There’s so much Hi Def programming you can get online, people want to get it to the TV screen.

That’s probably why investors are pouncing on Regency Resources- soon to acquire Digital Distributed Acquisition Corp, a “media based business offering an in-depth portfolio of content for Internet TV distribution” (according to a recent press release).

I dug into the SEC filings and learned RSRS has entered into a binding agreement to merge, but the merger is not closed at this time, which adds a bit of risk to the idea. Without the Digital Distribution company, the company doesn’t have much.

However, the market seems to love it. As you can see from this chart, the intention to acquire DDAC was announced on the 12th. The stock traded 500,000 shares that day, and has now traded nearly 3 million shares in 4 trading days. That’s quite a step up from less than 10,000 shares a day before the acquisition was announced.

The stock has also traded from $.85 to about $1.10, and could be just getting started. I’ve seen a few of these huge volume surges of late, and they all seem to be taking these stocks higher (see LUXR).

I really like this chart. I suggest owning it immediately, but the lack of information about company leads me to also suggest a tighter stop than normal. If the pattern repeats itself I could easily this one finding its way to $1.75 to $2.

Pick it up in this $1.10 range, but use $.90 for your SSL (suggested stop loss). If it trades below $.90, you’re on your own. However, if this volume continues and the stock continues to look this good technically, you might just find yourself notching a $.50 to $.75 gain (45% to 70% gain) against the possibility of a $.20 loss. I’m looking for this one to find these higher levels in the next two weeks.

All the major manufacturers are beginning to introduce pre configured Internet TVs, and someone has to provide the technology and content to make them worth it. Why not RSRS- if for nothing but a trading profit?


A reminder: Catch me live on TV every Monday from 12 to 2PM eastern.

Simply go to www.bigbizshow.com, and click on the “Watch Us Live” button. I’m the guest host on the show every Monday.

Home Page : www.otcjournal.com

Email Questions or Comments To: editor@otcjournal.com


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Facebook Madness Drives OTC Journal Winner

It’s nice to be right even if it takes a little longer than anticipated. 2011 followers should remember, and hopefully still have shares of video ring tone company Vringo (AMEX: VRNG)- a stock I featured in about 6 editions just a few short months ago.

My first edition on this company was published on Sunday, May 1st, and over the course of last year I wrote about 6 editions on the company. My first edition was at $1.40, and the stock found its way to $2.60 for a 44% gainer in 7 trading days.

The stock then fell on some hard times as they had some issues meeting their listing requirements with AMEX, but that is all behind them now.

VRNG has very clever video ring tones that are being adopted globally and now available to millions of mobile device users. The stock has gone nuts over the past few days as a result of the Facebook ap, and all the hoopla surrounding the pending Facebook IPO.

Their ap is very clever – here’s how it works. You call your buddy on your smart phone. You both have the Facebook ap installed. While you are talking to each other, you see his latest Facebook pictures roll by on your screen, and he sees your latest pictures as well.

Their revenue model is clever as well. You can get the AP one of three ways. You can buy it for $2.99 permanently, pay a monthly fee of $.99, or get a free version that allows advertising. Very clever.

Last I checked, the AP was available through Verizon for most mobile phones, but I’m not sure if the iPhone is included yet. If not, it will be.

This stock becomes one to watch as one of the only companies that has a killer Facebook Ap. As you can see from the chart, the stock went absolutely nuts out of the blue this week, and as we get closer to the Facebook IPO, could go even crazy. Probably a good one to accumulate on dips.

January Updates

Here’s a recap of the January ideas.

  • Liberator (LUVU)- introduced at $.15- closed at $.20 on Friday, off a high of $.24. 33% gainer based on Friday’s close. Still looking for momentum and much higher levels.
  • Frog Ads (FROG)- January’s introduction at $.30- Friday’s close at $.27 on nearly 1 million shares of volume. 10% loser, and on support- a good level for a trade right now.
  • Magic Jack (CALL) $15 March calls at $1.40- closed Friday at $3.10- up 121% – a giant winner.
  • Dexcom (DXCM) $10 March calls at $1.40- closed Friday at $1.80 for a 28.5% gain.

That’s 3 for 4 in January, with the giant win being the Magic Jack Calls up 121%.