November 10th, 2010:
July 14th, 2011:
July 17th, 2011:
The above links aim to demonstrate that I am a long time long in IDCC who has the courage (read balls) to disclose his share position at the end of each post so you know my motives.
My last post on July 17th was when IDCC was trading in the low $40s. I still hold my options and exercised all my in the money September Call options last month. IDCC is now 70% of my overall investment portfolio. I am all in and haven't taken anything off the table.
Why am I posting? because I feel a buyout is imminent...say in 1 to 2 weeks time. The due diligence phase is over and the 2nd round is the real bidding war. I suspect Intel, QCOM, Google, Apple, asian consortium (Huawei, ZTE, HTC), Nokia, Samsung, Ericsson are all still bidding, and that the bidding will look similar to the Nortel auction.
June 25th, 2011: when they thought Nortel would fetch $1.5B:
July 2nd, 2011: when Nortel auction fetched $4.5B. 4 days of bidding, and with many companies attempting to partner up as their spending limits were reached:
From the data I recieve daily (although some of the info is renewed fortnightly (eg shares short).
1.- Institutional ownership (% of float): 57.10% (used to be 59.60% 2 weeks ago). Institutions have sold aprox 1.1 millon shares these past weeks).
2.- Shares short(% of float): 17.03% equals 7,663,414 shares (previous 8,013,400) means that only 350,000 shares were covered in the past 2 weeks.
3.- Money flows
Equity money flow score: 82 of 100
Group money flow score: 47 of 100
From my info provider: Equity money flow score is a propietary calculation based on the classic money flow metric. It is enhanced to evaluate direction of the money flow line & the position of the indicator relative to past peaks and troughs.
Group money flow is an extension of the individual equity money flow score which summarizes the status of the money flow for the equity group.
IDCC is classified in Technology/Telecommunications/Wireless communications
I receive more data but this is what I want to share.
2 Weeks ago the money flow was higher, in the 95 to 98 level and this was parallel to the intense daily activity (aprox 3 millon shares/day).
The daily activity has fallen substantially but the share money flow remains fairly intact and much stronger than the group money flow. This is a relief for me.
I feel that the institutional selling has been minimal considering the silence from the Co., the drawn out auction process, the negative state of the market in general & that we just had the end of the quarter.
The short selling has also been minimal. Shorts must be very greedy or very confident. There is a massive short squeeze waiting to happen if we get good news from IDCC.
I also think that if we wouldn't have this auction in process the falling of the share price from the 73$ level to the present 47$ level is a screaming SELL signal.
What contrasts this sell signal is: the auction + the quality of IDCC assets & in the share information the medium and long term money that is still waiting. Waiting for this to be a success as we are.
You are clueless.
First of all: A "short squeeze" occurs when the lenders of shares sold short collectively demand repayment of the lent shares forcing short sellers into the market to buy against their will. Although all shorts would need to cover before any potential merger would close, there would be more than adequate supply from selling longs to satisfy any short seller buys.
Second, I have no idea what source provides the data you posted but those proprietary calculations are meaningless. There has been massive net money flow OUT of IDCC ever since the shares peaked in the $80's.
Third, the very fact that such negative "signals" are being generated DESPITE an auction in process (I believe, btw, that the auction failed on round one and that IDCC is scrambling to come up with a "Plan B") tells you that the process to sell IDCC is in big trouble.
Ask yourself why did Intel buy Infineon Wireless last year? Did you know that Infineon makes all the WCDMA RF/communic. chips using a sole 3G/HSDPA license from IDCC for the Apple iPhones.
Ask yourself why did Intel just raise $5B two weeks ago in a non-convertible bond offering that was done very quietly and their first in over 20 years. They did that despite having $5B in cash, $5B in short term investments and $2B long term investments. What are they planning on using the $5B in cash for?
Intel is planning on battling QCOM in RF chips as their PC processor sales growth is stalling with the gradual consumer move to tablets and smartphones. They will definitely bid on IDCC. Hell, they bid $1.5B on a weaker pool of Nortel patents before partnering with google in an eventual bid of $4B before finally pulling out on day 3 (per the India times article above).
What's at stake for Intel? How big is this market for RF chips: try $15 to $25/chip x 1.4B phones a year = Greater than $20B market. QCOM sells their chipsets for $18 to $25 (with over 400M chipsets expected in 2011) and then collects 3.25% on the final sales price of each phone.
Now consider that Intel runs near 60% gross profit margins, builds all their own chips, while QCOM has to outsource production to TSMC and you can see why Intel has an interest in IDCC. You can also see why QCOM will make sure to try and keep it out of Intel's hands or force them to pay a premium so as not to give Intel an easy entry into their space.
Google also intends to make sure that Apple does not gain more patents in their battle and vice versa. The asian consortium, while not cash rich, also hopes to gain patents to fend off rising litigation battles and costs. The $1-2B bid from the deal reporter means nothing as that is just the tip of the ice berg in a bidding war that started this week. I am hoping, like the Nortel auction, that this 2nd round is done in less than 10 days.
IMO, the only people that know what every single bidder is bidding is the top 3 or 4 IDCC officers, the IDCC board, and IDCC's bankers...and they aren't going to leak a thing if I know William Merritt as well as I think I do.
So don't let absurd rumors get you down or allow your shares to get taken.
The only fear I have is that the board will not accept a legitimate offer in the $85 to $100 range. A price tag that I am willing to accept.
Best to all longs.
technophile101, Great job on the two part posting. Your posts are a great example of a well thought out objective opinion backed up by due diligence without any emotional overtones. Although you post very infrequently, when you do post it is worth the read. Good Luck to you and IDCC during the auction process.
I listened to the Shareholders meeting in June and there's a large individual investor in Atlanta, he scorched the board for its repeated non execution, and lack luster wins in the marketplace, in one of the hottest sector growth area's: Mobile/Telco---of course to me IDCC was too tied to TDMA in for a decade and a half which was obsolete, they now have the or a drivers seat in LTE, the value of this property is definitely what will be the deciding value---
IDCC raised some $250mil thinking it could buy some patents in the Nortel auction, found a lot of interest in these properties.
very good post, I think Intel has a very strategic reason to buy or be a part of a buy out, your post presents that very well