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Thomas Walsh has been an active investor and consultant in the small cap arena for the last twelve years. He is a graduate of Union College with a degree in Economics.
    Aug 27, 2012 9:59 AM | about stocks: VRNG

    This article sets the record straight following an attempt from an anonymous blogger to recklessly impugn Vringo (NASDAQ:VRNG).

    Mis-Characterization by "Modernist" Prompts Response from Private Equity Blog Sponsor

    In a blog post Saturday night titled "Vringo's Alpha is Set to Reverse," the "Modernist" so grossly mis-characterized a private equity blog post that it prompted this response from its sponsor, Enhydris Private Equity, Inc., which is actually long Vringo stock (emphasis added):

    [W]e are disappointed with the efforts of some recent authors to misconstrue our primary conclusion in this article (see the last paragraph in the prior article). Simply put, our analysis suggests that Google will lose this attempt to introduce Prior Art because it should have been disclosed Pre-Markman hearing. It is our opinion that Google's legal team is in fact attempting to sneak this Prior Art into evidence prior to the September 11th, 2012 deadline for completion of Discovery. Indeed, they used a highly similar strategy in the Oracle case, and in that case, the Prior Art in question was stricken from the record.

    Our overarching goal with the aforementioned article was to bring investors' attention to the fact that the case is moving along quickly, and Google is employing the same legal strategy it nearly always does in patent infringement cases. The ruling on this Prior Art will undoubtedly be crucial to Vringo's case in either direction. If Vringo wins, Google et al. will likely seek a settlement in our opinion.

    Moreover, we believe it is necessary at this time to reiterate that Enhydris Private Equity, Inc. is long VRNG. We have full confidence in the stellar legal team Vringo has compiled, and believe they will prevail in this case. We are also extremely pleased with the recent Nokia Patent news, and feel it adds considerable value for shareholders. In other words, we firmly believe VRNG is not a one-trick pony so to speak.

    "Modernist" Highlights Google's Lawyers, Fails to Mention Quinn Emanuel Client Samsung Lost a Trial for $1 Billion the Day Before

    In his post, the "Modernist" posits that Google's lawyers from the law firm Quinn Emanuel "know how to play this game". While Quinn Emanuel is a respectable firm, the "Modernist" probably should have mentioned that a day before his article was published, lawyers from Quinn Emanuel represented Samsung in a widely-followed patent trial where a jury ordered Samsung to pay over $1 billion in damages to Apple.

    The "Modernist" correctly quotes James Altucher who points out that Quinn Emanuel also represented Yahoo! in its patent lawsuit against Facebook, but the "Modernist" fails to point out its resolution. For that, we turn to Foss Patents (emphasis added):

    [S]omething that just happened in that case is nothing short of astonishing from the point of view of a patent litigation watcher and represents a major embarrassment not only for Yahoo but to an even greater extent for Quinn Emanuel...

    The short version, in one paragraph, is this: Yahoo alleged that the inventor and his patent attorney deceived the patent office by saying they provided, without ever actually providing, a sworn declaration by someone who should either have been named as another inventor or have declared under oath that he wasn't an inventor, even though he was erroneously listed as one at an early stage of the application process. But the fact of the matter is that this declaration was provided, and it had been in the record all the time -- Yahoo's lawyers alleged deception when they simply failed to do their job. Facebook obtained the record and provided it to the court, and in the process found out that nobody had even accessed (!) the record before.

    The "Modernist" Track Record: Picks Since April Down Average of Over 40%

    Previous blog posts from the "Modernist" include the non-sequitur titled "Mark Cuban is 'Net-Short' Vringo" (Cuban is actually long Vringo, see a Wall Street Journal piece here) and another gem called "Vringo and Iceland". Consider some other "Modernist" recent picks:

    Date"Modernist" Pick"Modernist" "Analysis""Modernist" Result
    June 7, 2012Long RSH"RadioShack is a compelling value investment that can easily double its share price... Shares have set a low."RSH went down. "Modernist" PositionLOST 44.23% since article.
    May 22, 2012Long ZNGA"I love Zynga at these levels."ZNGA went down. "Modernist" PositionLOST 53.88% since article.
    April 25, 2012Short AMZN"This is an article about Amazon (NASDAQ:AMZN), and how it will destroy wealth for those who are currently long, and create wealth for those who get short."AMZN went up. "Modernist" PositionLOST 29.11% since article.
    April 19, 2012Long DDMG"I very rarely make an explicit prediction along the lines of a stock moving from $200MM to $1BB in a year. ... This is the kind of stock that will freak you out. In a good way."DDMG went down. "Modernist" PositionLOST 45.65% since article.

    For what it's worth, the "Modernist" makes this call on Vringo: "Vringo's alpha is set to reverse. It is time to sell." While "past performance is no indication of future results," we note that each of his picks listed above went an average of 43.2% in the other direction.

    * * *

    Disclosure: I am long VRNG.

    Stocks: VRNG
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Comments (6)
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  • sonicthoughts
    , contributor
    Comments (223) | Send Message
    Well done!
    27 Aug 2012, 02:58 PM Reply Like
  • DonaldTrumpsCombover
    , contributor
    Comments (11) | Send Message
    Thank you for injecting some rationality.
    27 Aug 2012, 03:05 PM Reply Like
  • Modernist
    , contributor
    Comments (2109) | Send Message
    I have been criticized for referencing a blogger (Enhydris), because the blogger ultimately disagrees with my conclusion. But my article does not rely upon Enhydris validating my conclusion. I simply credited Enhydris as the source of an excerpt I used. The alternative to doing this would be using the excerpt without attribution.
    28 Aug 2012, 12:10 PM Reply Like
  • Modernist
    , contributor
    Comments (2109) | Send Message
    I also excerpted James Altucher. He also disagrees with my conclusion. Where in my article do I suggest that everyone I excerpt agrees with me?


    If you look closely at the Vringo articles, you'll notice a bullish author who literally copies my text without attribution. If you're long and concerned about bears' (my) misuse of bulls' (Enhydris) ideas, you should probably also be concerned about VRNG cheerleaders who are parroting my ideas wholesale.
    28 Aug 2012, 12:11 PM Reply Like
  • Modernist
    , contributor
    Comments (2109) | Send Message
    Or, since I disagree with the Enhydris conclusion, I should have simply ignored everything Enhydris wrote, and left out the excerpt? Is this the type of extremism it takes to join the legal crusade against Google?


    Did I have some obligation to completely paraphrase everything Enhydris has written on the subject--or was it honest enough that I linked to the website for those who cared to read it (as many clearly have read it after my article)?
    28 Aug 2012, 12:11 PM Reply Like
  • Modernist
    , contributor
    Comments (2109) | Send Message
    As VRNG longs shamelessly drag my pseudonym through the mud with half-truths about the stock picks I have made across 80+ articles, do they have the right to complain about the nuance of the honesty of my representation of Enhydris?


    I have been criticized for omitting the fact that Quinn Emanuel represented Samsung. But I made it clear in my article that the Apple case wasn't technically applicable to Vringo v. Google.


    The bottom line is I am being held to a double-standard of thoroughness by VRNG longs that they would never dare hold bullish authors to.
    28 Aug 2012, 12:12 PM Reply Like
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