What do we make out of DECN?
On one hand we have a hard-core group involved with the company for years, then we have some who entered late 2012 (like my part) and we have some who tried to get some bucks out of the swings that where expected to come based on rumours or based on court decisions. Swings we got but of course not the expected big upswing after the first big boom, but the slow downtrend interrupted from time to time from smaller reactions.
But then why is one in DECN? Because of their business or because one sees inner value due to the litigation case? From my point of view it is the latter part that attracted me and then of course as well the speculation that it won’t take years to clear the table and therefore DECN would then be a cash-rich company ready to execute their business plan.
Has anything changed. As far as I can see no. Do we have to lower expectations when it comes to Dollars being paid and accepted. Maybe – maybe not. But what is then actually built into the price:
If I guess that DECN has approx.. 40 Mio shs outstanding then the capitalisation is $ 8 Mio.
Is this a too speculative figure for some to imagine, that such an amount could be forwarded? If so, then I would guess the whole case is not understood.
J&J is in a very weak position and the know this. Apart from a ruling from the district court in favour of J&J, the Federal Circuit reversed this decision quickly, using guidance set forth in Quanta. And then we have the very clear wording of the USTPO rulings. One can hate the company and even ridicule the company, but one cannot deny, that DECN is in an excellent position and as a matter of fact one could say: The doctrine of J&J to stop the enemy at the gate, ended in a terrible defeat and opened the gate very wide. Comes to it, that J&J’s strategy to have their case heard failed as well when it came to light, that they presented a “notorious fake-witness” . So not only they were brought down by the law but gathered additional damage through their fake expert.
The compensation game of course is another story then but even if one would say: let’s walk away with the 12.5 Mio bond and forget the whole case, nobody could come and say, that this amount is too high and being so, then we can certainly attach a value on DECN. If the compensation would be that low, it still would add $ 0.30 cash to the stock and with this cash I would guess the market would not have any problem to pay $ 0.60 per share. I have seen turn-key situations in Europe and USA were part of the amount being paid was used by the companies to repurchase shares in the market and the rest was used to expand the business. I would guess, DECN would implement the same strategy here if the compensation is in surplus of the needs.
Being down at 0.20 is a fact and actually does not surprise me any longer. We are in the stage on non-reporting which of course keeps away some buyers, then there is not much out there newcomers could orient on and so we entered the frustration cycle, were people give up and go elsewhere (which happens every day in the market) and others convinced that the invested dollars will give a nice return, stay or even accumulate in a very orderly manner.
Then something as well to think about. There are institutions holding DECN and they even filed and everybody can find them under Edgar. But this is not of interest to me. Of more interest are those off-shore portfolio managers who hold shares below the reporting obligation and I would say, that together with those who filed and the latter group they could be in control of close to 70 % of the company. In Wealth-Management you have accounts they are operated like a basket. If you have a litigation basked you put in there 25 companies with the same amount-allocation and if you have a bio-tech basked you do the same and if only 5 of those companies succeed you outperform. It is like in the Junk-Bond market. The returns are extremely high if and when successful and as we all know, the upside is unlimited whereas the loss limits itself.
It is within that group that somebody could put pressure on a company for higher compensation, although I am personally against such kind of strategy.
Conclusion: The present stock price has build in a compensation of way below $ 8 Mio. So from this point of view, everything higher than this will of course end up in a higher price. Comes to it, that no premium is build in for future business.
And, not to be forgotten: Once DECN is up to date with their filings I would guess, that then as well some on-shore portfolio managers will look at the stock.
