3. Brookwood's Motion for Summary Judgment of Non-Infringement and Patent Invalidity
Brookwood moves for summary judgment of non-infringement as to all ten Asserted Claims, or in the alternative, for summary judgment of non-infringement as to seven of the ten Asserted Claims and for a declaration that the other three Asserted Claims are invalid. (See generally, D.E. 90.)
As an initial matter, Brookwood argues that all ten Asserted Claims should be construed as excluding coating processes that use material concentrations of solvent in the coating composition, and that so construed, Brookwood's products do not infringe any of the claims as a matter of law. (Id.) Resolution of this aspect of Brookwood's motion requires the Court to construe the term "shear thinning" (and "shear thinnable"), as used in the Asserted Claims.
Alternatively, Brookwood advances various arguments that affect some, but not all, of the Asserted Claims. First, Brookwood contends that the Storm-Tec Products do not infringe the `051 and `172 patents (representing seven of the ten Asserted Claims) because they are not manufactured using processes that utilize "thixotropic" polymer compositions. Resolution of this aspect of Brookwood's motion hinges on the Court's construction of the term "thixotropic," as used in the claims of the `051 and `172 patents. Second, Brookwood argues that claims of the `841 and `902 patents (representing the other three Asserted Claims) are invalid as a matter of law. Brookwood contends that claims 1 and 57 of the `841 patent are invalid because they are anticipated by prior art— specifically, by Brookwood's own KK-1 coating apparatus. Brookwood also contends that claim 1 of the `902 patent is invalid under one of two alternative theories depending on how the claim is construed. If the claim is limited to processes utilizing polymeric compositions, Brookwood contends it is invalid based on double patenting in light of the `792 patent. If the claim is not so limited, Brookwood argues that it is invalid because it is anticipated by the `643 patent. (Id.)
4. Brookwood's Contingent Motion for Partial Summary Judgment on Damage-Related Issues
Finally, Brookwood argues that if the Court does not dismiss Nextec's claims under the `841 and `902 patents on the basis of non-infringement or invalidity, then any claim for damages based on these two patents must be dismissed as a matter of law pursuant to 28 U.S.C. § 1498(a). (See generally, D.E. 97.)
From what I have read, Full patent violations have been dismissed and the case rests on 10 claims. The first 7 claims have been or are likely to be dismissed due to nextec's claim that they deserve a special definition of a chemistry term (sorry this is so vague I don't want to re-research) which the judge wrote that he disagrees with. The final 3 claims seem to be the only hurdle left and these two paragraphs included (excerpt from the memorandum) are the arguements by Brookwood (Hallwood). What are your opinions? It seems to me that Hallwood stands a better chance than what the market is discounting to win this lawsuit. The link to the memorandum is included below.
Could very well be the case, but 2nd Q was good enough and the price had been sliding before the news came out.
Even if the company was earning half of what it's earning now, the stock would be a bargain. Cash flow of around $12 per share for a stock trading around $35? Too cheap. It must be liquidity/insider ownership/litigation.
In your bankruptcy calculation, what's the first 10 that you multiply the FY10 EPS estimate by? Historic P/E multiple? I think the market's pricing in possible lower earnings, not really considering bankruptcy.
It's hard to believe a stock that was trading for $40 after earnings has shaved $10 off on no news. It's a huge gap down.
That's almost 25% now and this price is just discounting a lot of risk. We're almost at the level where the insider sold last year (and it was very little stock). Cash flow on the last Q was even better than EPS, which means management is running working capital more efficiently.
Another factor we're not taking into account is management purchasing the Connecticut plant. If mgmt was negative about future developments, why would they reduce the liquidity of their investments and exercise the purchase option?
I think this stock is just one where you stop looking at the chart and tuck away until there's significant news out.
I really meant the big Investors (Banks, mutual funds, etc.) I think that they owned 56% of the float around the end of 1st quarter, I saw that many sold when they reported at the end of 2nd quarter. But I think that many large investors don't like HWG due to low float and lack of liquidity. I am anxious to read your post after your phone call Monday, I think if the supplier is critical to the military (National Defense) there are special rules, plus I noticed that most of the board of HWG have legal backgrounds so I think that if they did infringe they did it in such a way so it was legal, just look at the pharmaceutical company's one comes out with a new drug, then the other one's change the chemical makeup somewhat, give it a new name and get it to market. Be sure to post the results of the call and ask lots of questions for everyone on the board
Good Luck to you and everyone else here
I can't imagine ownership selling in front of a lawsuit on insider knowledge due to risks so i agree it is nothing to worry about (also it is just a $34k transaction). I have a phone appointment set up for monday so I hope to have the answers to your questions. I thought those were pretty important factors into continued ownership. I am not as worried about the lawsuits as the market. Currently the market is pricing in about a 61.5% of bankruptcy (10*12(FY10 eps aprox)*x + (1-x)*0*(10*0 eps in bankruptcy) = 1 solve for x. I see this as ultimately unrealistic and thus a huge value as well as possible large reward. I agree with an arbitration outcome and I don't see hwg going bankrupt with a decision against it (though a possible decrease in stock price). It seems to me in short research (not thorough) that hallwood provides materials to other companies Tennier and ORC who make the final sales to the government. They are a crucial provider from my understanding though I will let you know for sure after my appointment.
I was checking the institutional ownership and it looks like there was mostly selling last quarter. It's my opinion that this has little meaning but may be causing the downside pressure on this issue. I was watching level 2 today and there was a 1000 share sell order @ 34 if it comes up next week there may be more downside. Does anyone know if HWG and Nextec are the only suppliers of the fabric for the military and what % of market does each one have. The thing that I keep thinking is that the military will want at least two suppliers. The judge for the lawsuit may order case to a arbitration panel, there could be many outcomes that will settle this. Also does anyone know if the military prefers one suppliers fabric over the other one's
Update from the quarterly report said one of the 3 remaining patent claims was dropped and one was possibly added on #900 something (i forget the number). With such a low volume that any seller can create a scenario where the price really drops off. They don't seem any more concerned about the lawsuit then before and I haven't found any further update on them since June.
Market is already discounting a lousy quarter (maybe $1.50 EPS) or some negative commentary from management regarding lawsuit. Absent any of those, this stock is a real bargain. Only time will tell, the rest is just speculation.
Here's the problem, as I see it: the decision you reference came out on 3/31/10. HWG stock spiked in early April with release of Q4 results, but has drifted down since -- and now is down about 25% from its price at the end of March. Furtger, volume picked up by quit a bit during he past 1 1/2 weeks. It sure seems to me that somene wanted out rather quickly from a very thin stock. So, if litigation news at 3/31 was positive, then either something else bad happened, the 3/31 decision is not adequately positive, or not adequately material. Something is wrong here. I'm kind of waiting for a shoe to drop.
the problem with your logic is that you assume other buyers and sellers are more correct than yourself (which may or may not be accurate). Any news on a court case is public information and I would have been able to find it in my research. In a thinly traded stock, selling can easily out number buying and large price swings are common. Considering the price is still almost 150% higher than last year selling could be for any reason. Speculation is tough to debate so I prefer facts...