(Editors' Note: This article covers micro-cap stocks. Please be aware of the risks associated with these stocks.)
Many investors reaped substantial rewards recently concerning the Vringo (VRNG) vs. Google (GOOG) victory. Now that the case has moved on to the Appeals court, many investors will take their respective capital gains and seek other opportunities. The "Vringo" experience is proof positive that Patent Assertion Entities (PAEs) can be fantastic vehicles for appreciation. However finding these PAEs, with Vringo like potential, can be a difficult task. Investors want the billion-dollar verdicts balanced against maximum "bang for the buck" yields. These companies have taken that billion-dollar verdict quest, and some may actually get there. Here's my reasons why.
VRINGO
Vringo's opportunities abound, most notably in the Appeal that was filed in March of 2013. Vringo is appealing the Laches ruling issued by Judge Raymond Jackson. Today's stock price neither fully accounts for the successful Order for enhanced royalties, nor the possibility of setting aside the Laches ruling. The latter being set aside would allow for past infringement damages, should Vringo prevail against Google. Few are willing to assess this valuation possibility in the stock price. The reasons are obvious; Vringo has to prevail in the Appeal. Then it's back to the District Court where Vringo has already won the Royalty base of 20.9% on Google's Adwords US Sales (accounts for approximately 50% ), and assuming a win, more than likely back to the Appellate to fend off the inevitable Google appeal. This could be another 18-24 months; however some $500 million or more in damages are at stake and this PAE has shown a strong propensity at winning.
Google Revenue at risk concerning the Laches Appeal
(Source: ycharts.com)
The chart above reveals the gross revenue at risk to Google. Revenues thru 2005 to 2011
