Just hours before the stock market closed for the Thanksgiving holiday on Wednesday, the U.S. District Court in Norfolk, VA entered its official judgment in favor of Vringo (VRNG), confirming the November 6th Jury award in the AOL (AOL), Google (GOOG) et al case. The judgment upholds Vringo's 3.5% running royalty and past damages from September 15 , 2011.
News reached investors just after 2 p.m. Eastern, leaving less than two hours of trading time for the market to begin to digest what this means. Opening the day at $3.61, VRNG climbed as high as $4.05 before closing at $3.75 on volume of 8.2 million shares, versus average volume of 8.0 million.
I won't speculate about the curious timing of the court's decision, coming at a point in the day when most investors and money managers had already begun their holiday travel, but the next few days will show much heavier volume as this positive Vringo development becomes widely disseminated, known and interpreted. Of course, Friday is an abbreviated market session, but VRNG bulls and bears alike who are keeping up with their holdings should follow the stock closely.
Vringo bears will no doubt somehow spin the court's news and the stock's meager 3.9% gain on Wednesday afternoon as evidence that Vringo's victory was pyrrhic. But Vringo bulls will point toward what this legal win means to Vringo's future revenues, pending court cases, working capital of $60 million, and perhaps even other new patents the company has filed.
The court's ruling provides strong reason to become longer-term investors in the company, as Vringo management's strategies gather steam and produce even more results over the next two to three years. Vringo message boarders will continue to make wild predictions both ways about the company's future, but there is no disputing at this point that Google lost, Google lost significantly, and Google et al lost repeatedly, and that Vringo's legal position has been consistently validated -- and even enhanced -- over the last two months.
The next few days and weeks will see traders and speculators make a quick exit, as those long hoping for the stock to make a quick pop to $15 will likely be disappointed. But traders will be gradually replaced with investors, including more and more institutional investors, who realize that Vringo is here to stay and here for the long haul. (See "Institutional Investors AIG, Alyeska, and Kingdon Build $20 Million-Plus Stake in Vringo")
Vringo is also now obviously more ripe than ever as a potential acquisition for the likes of whatever large company can finally perceive both its inherent and ongoing value. Naysayers will keep calling Vringo a patent troll ("Sticks and stones..."), but many shorting Vringo will be forced into making some unexpected covers in the near future.
The day before the court affirmation, I added to my long position by buying some Vringo 5.00 call leaps, which expire in January 2015. It's time for Vringo bulls and bears alike to re-evaluate their longer term thinking about where Vringo is headed. But after endless and often exasperating investor speculation regarding Vringo's case against Google (barring the appeal, which may still come) and what it will mean to Vringo's stock, the court's ruling is no doubt yet another major win for the company's future.
For Vringo bulls, Thanksgiving came even earlier than expected. Enjoy your turkey.
Disclosure: I am long VRNG.