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John H. Ford
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For the past 30 years, I have been involved in startups, as a founder, and active investor. My first company was purchased by Johnson & Johnson, which set the foundation for future investments. My level of trading escalated after graduating from college, primarily as a result of my... More
  • VHC's new patent provides leverage in potential buyout negotiations. 9 comments
    Apr 5, 2011 10:09 AM
    An investment banker, introduced me to this company, when the share price was about two dollars.  It looked like a risky situation to me, so I didn't purchase any shares until the stock hit the five dollar range.  I have been trading common shares and options ever since.

    The word on the street is that VHC might be in negotiations with potential buyers at a share price of between $40 and $60.  What is significant about today's patent news is that this gives VHC more leverage in their negotiations. Keep in mind that most likely, the potential buyers are also the patent infringers.  This added patent not only increases the value of VHC, but also creates a greater need for any potential buyer to own VHC, simply to avoid the patent infringement liability.

    The other significant factor is that negotiations may have started when the share price was around $12.  Now that the share price is north of $20, the pressure on potential buyers is increased.  VHC is definitely sitting in the catbird seat.

    Another rumor among Wall Street investors is that a number of patent infringement settlements could be announced soon.  That explains why Wall Street is buying at $20 and above.  Anyone who is buying at this level is expecting significant patent settlements, or a buyout in the $50 range.

    I am maintaining my long position, betting on a buyout, and patent infringement settlements.
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Comments (9)
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  • dkitt
    , contributor
    Comments (14) | Send Message
     
    Thanks for your update.

     

    Johnford you write:
    "The word on the street is that VHC is currently in negotiations with potential buyers at a share price of between $40 and $60."

     

    and

     

    "Another rumor among Wall Street investors is that a number of patent infringement settlements will be announced soon, meaning within the next three months."

     

    Could you add any more details as to who are your sources and comment on their credibility?

     

    Thanks,
    dkitt
    5 Apr 2011, 10:42 AM Reply Like
  • John H. Ford
    , contributor
    Comments (51) | Send Message
     
    Author’s reply » In terms of the credibility of my sources, their credibility is high enough for me to go long, but like all Wall Street professionals, they are sometimes wrong, so I am keeping a close eye on things. A more important question to ask yourself, does it look like there has been an information leak? With the volume and trading range that we have seen lately, it sure looks that way, to me.
    5 Apr 2011, 11:10 AM Reply Like
  • gloriason
    , contributor
    Comments (39) | Send Message
     
    Wow! I'm speechless, hope you have some good intel to back up your statements. One thing is for sure, VHC has tremendous potential!
    5 Apr 2011, 11:10 AM Reply Like
  • sidd999
    , contributor
    Comment (1) | Send Message
     
    Johnford - VHC down 10%!!!, what's up with your prediction?
    6 Apr 2011, 12:06 PM Reply Like
  • dkitt
    , contributor
    Comments (14) | Send Message
     
    johnford, you have written about a possible settlement and/or buyout but have you any idea if we will see Analyst coverage by a major Wall Street firm?

     

    4G is heating up and Release 10 of the 3GPP alliance is focusing interest on companies that have foundational patents crucial to 4G.

     

    VirnetX has the 4G security patents.

     

    While possible updates from stock pickers and investment letters like Konlin, Dawson James, and Oakley’s Wall Street Corner, who have all covered the stock in the past are a possibility, a major firm would certainly focus attention on VirnetX.
    8 Apr 2011, 07:18 PM Reply Like
  • John H. Ford
    , contributor
    Comments (51) | Send Message
     
    Author’s reply » Yes you are right, a major analyst initiation would certainly help the share price, but I have heard nothing. It seems like a possibility right now with a major run up on large volume, with a company operating in a key industry. It's probably only a matter of time, and it could happen sooner rather than later.
    8 Apr 2011, 07:37 PM Reply Like
  • haikman
    , contributor
    Comments (4) | Send Message
     
    what do you think of VHC now?
    3 Aug 2011, 11:15 PM Reply Like
  • John H. Ford
    , contributor
    Comments (51) | Send Message
     
    Author’s reply » Nothing has changed materially within the company. I sold all my common shares and options weeks ago, and will be building a new position during this dip.
    8 Aug 2011, 11:40 AM Reply Like
  • Tom Shaughnessy
    , contributor
    Comments (1122) | Send Message
     
    Just came across this! Great read on VHC thanks John, and you were in from a long ago! Check out my new article for updates on VHC if you want!

     

    Have you been long since 2011?

     

    http://seekingalpha.co...
    18 Aug 2013, 12:31 PM Reply Like
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