Sunday Night Rant Part One....
As you know I post these for the new investors/lurkers and hopefully add some more information that may be useful to the longs. I will NEVER be part of SA so consider this my article for DSS investors only. I will leave the hype machines to those authors. Two parts covering four events this week that should come to some sort of climax.
Hudson Bay Put Options:
The put buyer (Hudson Bay) either believes that the underlying asset's price will fall by the exercise date or hopes to protect a long position in it. If you own a put that is in the money at expiration, it will be automatically exercised. That is, the terms of the put contract are enforced such that you must sell the underlying shares for the strike price. What is interesting in this scenario is that there had to be a willing partner here. HB could not sell to themselves shares in order to purchase the PUTs. Their 13F statement even shows they own zero shares of common stock. The ability to write 7800 contacts had to come from another institutional entity. I will let Nolerman or someone else expand on that. Basically I am saying based on all the converted shares that LTG early entrants sold and the purchase of 780K puts by HB there is no need to figure out how we have tanked on absolutely no news. A quick look at the Sep Options shows that Call Open Interest outnumbers Puts by more than 2-1. I would take this as a bullish signal moving forward on the stock.
Legal Proceedings:
This has been quite the exciting week regarding our uber speculative group. The CRM suit was dismissed (With Prejudice) by DSS/Bascom and these same attorneys now were identified as lead counsel for the FB/LNKD case. I think we all can agree this has been a “5” since it occurred. Let’s agree that the new firm didn’t just show up on our door step in the past week. They filed a 233 page brief against CRM back on 6/27. I may not be an attorney but these things normally take at least 60 days to produce to that level before filing. Let’s just “speculate” that they have been around since 4/1. The FB/LNKD case could not even get through the discovery stage at this point. Basically it was an ongoing argument about narrowing the focus of the complaint. At the same time BVSN, JIVE, and a bit later NOVL were settling their cases. After reviewing the most recent filing to shorten the Timeline, can anyone doubt that they are ready to run with the case? NO WAY. I am not sure how the judge is going to react yet but hopefully her response will dictate how she wants to proceed going further. This should be a week where at least two pieces of information are released.
1. Judges decision regarding Bascoms request to shorten timeline.
2. Results of the 8/8 scheduling conference in the Virtual
Agility vs CRM.
The CRM case being dismissed was absolutely a positive event. The company has stated that the new firm is a “step-up” from the original firm. I am fairly certain this just means that they are a more focused IP litigation company. Kramer Levin is a power house to be sure but they also are better at some litigation than others. The next month or so should reveal their true capabilities to us. I have often remarked about the psychology of IP investors regarding legal proceedings. I have stated in the past that this company is more than a pure IP play for me than any one piece of litigation. Don’t get me wrong, the litigation side can add the biggest PPS increase but it also is a long slog for the investor. I took a position based on the fact that they could add value through positive news on the operational side during legal lulls. It just seems to me that IP investors stress incessantly about dates or responses when it is just a “piece” of information at that moment in time. The investor will never know the actual strategy behind the plaintiff OR defendant.
