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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Where Are VCs Clamoring To Invest? VRNG Near New High

Where Are VCs Clamoring to Invest?

There’s a new, red hot sector in internet investing, and the Silicon Valley venture capital firms are just flinging money in this direction even faster than Ben Bernake prints the stuff up at the Federal Reserve. Believe me- that’s fast.

Here’s a few eye opening facts:

  • Amazon (NASDAQ: AMZN) bought a company in this sector for $110 million in 2010
  • Nordstrom (NASDAQ: NOBE) bought one for $270 million in 2011
  • American Express (NYSE: AXP) did a 50/50 joint venture valued at $3 billion in May of 2011
  • $70 million just went to one competitor in the sector for under 10% of the company.

Have I got your attention? Here’s more…..

Flash Sales: The New Gold Rush of Silicon Valley

Flash sale sites are the new Gold Rush of Silicon Valley- a place that has seen more than its fair share of gold rushes over the years. Flash sale sites are borne out of the 2008 recession.

When the US was facing a complete financial collapse three years ago, manufacturers and retailers found themselves in the precarious position of having too much inventory laying stagnant in their warehouses and on their shelves.

Retailers can have special sales, but their brick and mortar customer bases are limited to the immediate area. Manufacturers can offer big discounts to retailers- but again- you are limited by the brick and mortar proximity.

eCommerce pioneers came up with the brilliant idea of a Flash Site, and here are the main components:

  • Build a user of base of 1 million plus consumers who are highly motivated by deep discounts on merchandise.
  • Negotiate a very deep discount “bulk” purchase from a manufacturer of some sort of excess inventory.
  • Offer the product to your subscriber base by passing on these huge discounts for a limited time- while the supply of inventory lasts.
  • Move mountains of merchandise in a limited time, thereby freeing up badly needed capital trapped in the manufacturer’s excess inventory.

Needless to say- you have to find products consumers want at a deep discount, and have the registered user base to move the merchandise.

As I stated above, the Silicon Valley VCs are just throwing money in the direction of these companies. Here’s more examples:

  • Gilt Group was recently valued at $1 billion based on an investment made by Goldman Sachs, Pinnacle Ventures, Matrix Partners. Gilt is expected to do an IPO in late 2012.
  • Zulily received $43 million in VC funding last August from Meritech Capital Partners
  • iDeeli just raised $70 million from Kodiak Ventures, Constellation Ventures, and Starvest for just under 10% of the company.
  • OneKingsLane was valued at $440 million in a recent investment by Kleiner Perkins.
  • Fab.com received a capital injection of $40 million from AndresenHorowitz this past December. The financing valued this total start up at $200 million.

So, where is all this fantastic information leading? Glad you asked, because I happen to have the answer.

Believe it or not, there is only one public company in the Flash Sale business, and as compared to the money raised by the names you see listed above and the valuations, this stock is very undervalued.

I’m also personally an investor in this company. I own both free trading shares I’ve purchased, and restricted shares I’ve purchased when I helped finance this company’s growth.

In light of the explosion of interest in the sector, I’m very optimistic about the opportunity to notch some major profits in the near term.

I’ll be introducing the company to you on Thursday- remember- it’s the only Flash Sale Site public company you can participate in today.

Stand by for the 411…. I’ll have all the information, and then you can make your own informed decision.

Vringo (AMEX: VRNG) Trying For New Highs

In case you’re following huge OTC Journal win VRNG (introduced last year at $1.20- now $3.37- the stock has been trying for another new high the last couple of days on some very positive developments.

It’s traded over 1/2 million shares today, down from over 1 million shares yesterday.

The surge in the stock is being fueled by a research report out of Five Star Equities, citing the significant opportunities in the growth of the 4G LTE networks as being significant fuel for companies with services in the sector.

Five Star forecasts LTE Phone shipments will grow 10 fold in 2012, from 6.8 million units in 2011 to 67 million in 2012 globally.

Two companies mentioned in the report that should benefit greatly from the growth of 4G LTE networks and handsets are Zynga (NASDAQ: ZNGA), and Vringo (NYSE: VRNG).

If this company continues receiving this kind of positive press, breakouts to new highs are inevitable.

If the stock pulls back to the $3.15 level, that would be a good time to accumulate. If it softens more and holds $2.50, that would be a great time to pile in with a full position and a tight stop. I would not hesitate to suggest jumping into this one if and when it pulls back to that level.

This stock has gone from quiet and under followed to “In Play”. Several analysts and writers have picked up on the story, and I suspect there’s more to come.

Use a pullback to get positioned.

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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%.

Vringo (AMEX: VRNG) Rings the Profit Bell


     
 
 
  October 12, 2011  
  Volume
XIII, Issue 94
 
 

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To
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Vringo Rings the Profit Bell

We’re making some real progress on this alert already. Remember, the last time I published on Vringo (AMEX: VRNG), it took a week or so to notch a 44% gain. Nevertheless, as you can see from the chart, yesterday’s opening trades were at $1.36. The high print today has been $1.69.

From yesterday’s opening trade, to today’s high trade, there’s a 24% move. The only way to have captured that move would have been to trade into the stock right at yesterday’s open, then leave an open, good-till-cancelled limit order to sell 20% higher. You would have scalped a beautiful profit.

If there’s some follow up news soon, we’ll likely see a repeat of the 50% we made on the stock back in May. Stand by, and keep your SSL in place. As long as the highs keeping getting higher each day, and the lows get higher, it’s going to be a money maker.

Now- let me ask you this. There are highly successful small business all over the country installing residential solar power. It might not be so great in Seattle, but if you live in Phoenix you can all but eliminate your air conditioning bill and get a tax incentive for installing the systems.

Suppose there were a company that could offer those same cost savings using a different form of renewable energy, and suppose that company was publicly traded?

Also, suppose that company’s stock had been literally cut down to 1/3 of last May’s price where it traded millions of shares, has been sideways for 2 months, and is ready to come charging back up the charts?

If these kinds of low risk entry points on very hot stocks interests you, stand by for a new idea post close tomorrow. I see this one being Deja Vu all over again. It was red hot in the spring, and I believe it will be red hot again- very soon.  As usual, OTC Journal subscribers get the pole position.

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