IDCC: Who Is Selling?
Certainly not value buyers who bought this much higher. IDCC has $10 of net cash and more than $2.50 EPS. Any value investor would buy this at 10X earnings.
Traders will keep buying this as long as it holds $35, which it appears to be doing.
This is an unusually low-uncertainty situation. Everyone knows that 4G will replace 3G in the coming cycle. IDCC’s royalty revenue is sure to increase. Just about the only thing that is uncertain is the Nokia litigation.
I started a long position in IDCC today.
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I also opened a long position in IDCC yesterday. Looks like a classic case of selling due to factors unrelated to the actual business–after the nearly year-long slide from its post-announcement highs last summer, there was little if any ‘deal premium’ left in the stock. Now there’s negative deal premium, courtesy of speculators selling without regard to the stock’s actual fundamentals. Nice situation to be in (similar, I think, to the stereotypical post-spinoff price action, except more likely to actually occur going forward, courtesy of Joel Greenblatt not having written a best-selling book on post-deal-cancellation investing). Unfortunately, I’ve had to skimp on the detailed fundamental analysis on the stock, but I’m with Soros on the whole ‘shoot first, question later’ thing…and my instincts told me I couldn’t afford to miss the opportunity. (ask again a bit later, and I will be able to tell you whether or not my instincts deserve to be struck upside the head by a brick). On a more serious note, if you happen to have written up any decently in-depth analysis of IDCC, I would appreciate a post (or email) to assist my more in-depth analysis when I have time to do sit down this weekend and research it further.
Dealreporter has written about IDCC. It seems like the bankers messed up on this one. There was never any bidding war scenario.
The reports I’ve read on IDCC are pretty bad. Lots of extrapolation about what the patent portfolio is worth. I wouldn’t call it analysis. It’s more like babble.
Yeah, I’d hesitated to call anything I’ve read about IDCC a ‘report.’ Mostly a lot of ‘conservative’ estimates about the value of IDCC’s portfolio (without, of course, any decent analysis of why it’s worth that amount, or to whom). According to what I read, the deal was a sure thing with a price easily greater $100/share (and intermediate-dated OTM call options were the deal of the decade or something…). There was a reason I was asking you if you’d written anything up, instead of pestering the authors of various IDCC articles–I actually respect your input, and what I’ve read so far elsewhere wasn’t worth the ink it was printed on (and I read everything in digital form).
I sincerely have little idea of what the patent portfolio is worth based on any method other than a reasonable multiple of the cash flow it generates (and my generally favorable view of demographic/product adoption trends going forward). General demand for buying these patents was definitely overestimated; not only was there no bidding war scenario…it seems there was only sporadic/selective bidding with no large-scale offers at all. Oops, someone botched something.
Have you looked at CCL? Value guys should be all over it.
I don’t know a thing about the cruise ship business. I imagine it’s one of the most economically sensitive types of businesses you could buy into. And I’m pretty bearish about that kind of thing.
poor Paulson….