Friday, February 17, 2012


If you didn't notice IDCC broke through resistance (38) and closed at $38.95.

Today, I will give you 5 1/2 more reasons I bought IDCC.

6. IDCC owns a large share of the intellectual property used in nearly every smart phone on the market utilizing the 4G/LTE technology.
7. To understand #7, you have to know that Nokia's intellectual property was considered to be less than 1/5 the value of InterDigital's intellectual property and that Nokia sold to a consortium of buyers for $4.5 billion which theoretically makes InterDigital's patent pool worth at least $20 billion.
7a. Using these Nokia type metrics, InterDigital's stock should be selling for more than 10x it's current value.
8. Using the magic formula from Joel Greenblatt, IDCC would land in the top 50 most undervalued stocks that have a market cap of more than $1billion.
9. On January 23, the stock price went from 44 to 35 because the company said that after a strategic review, they concluded that it isn't worth it for them sell the entire company in one shot and that they are better off selling piece by piece or in their case patent by patent. This conclusion really should have resulted in the stock going higher, not lower. I believe the market really misread this one. The result-the stock has bounced from 35 to 39 in less than a month and will no doubt continue to go higher.
10. IDCC has an outstanding business model. Their business model is designed around their capability to be flexible enough to conform to any kind of new technology used in the cell phone business. Think about that, it says a whole lot.

IDCC is one of those special stocks that the more you know about them, the more you will like them. The funny thing is that maybe the best reason to own them right now, which wasn't included in the top 10, is that they are plaintiffs in a boat load of patent infringement cases, each of which could serve as a catalyst to propel the stock higher if they were to be victorious.

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