VRNG and from OTC Mail Ever fish for bottom feede

VRNG and from OTC Mail

Ever fish for bottom feeders? Halibut comes to mind. Those gigantic pre historic fish look like they are laying flat on their sides as their mouths vacuum up all kinds of nutrients from the ocean floor. Certain types of bass fishing lend themselves to teasing the poor creatures with a juicy shrimp a couple of inches from the bottom.

Ice fisherman have to employ the same technique- after drilling a hole in the ice, the fisherman must release his line and let it go down until there's slack- thereby, identifying the depth to the bottom, then retrieve the line until his bait hovers just inches above floor of the lake.

Thanks to this week's events, we now have found bottom on the Vringo story, and I believe it's now safe to fish for profits.

In case you missed it, VRNG raised $31.2 million this past week with 3 institutional investors. The company issued shares at $3.25 to these three institutions. VRNG then took $25 million of those funds and bought the rights to a number of cellular infrastructure technologies from Nokia.

According to the associated conference call, VRNG will now receive recurring revenues from this intellectual property, but more importantly, this acquisition provides VRNG with more opportunities to go after infringers on the patent VRNG just purchased from Nokia. In the subsequent conference call, VRNG's management indicated there are many high profile targets to sue in this case.

In case you haven't figured it out, VRNG is a professional extortionist in a completely legal manner, and potentially profitable if you're a shareholder. Their rather clever management has acquired IP - specifically the search technology developed by Lycos, and is going after Google, AOL, and others in court to collect on a patent infringement suit.

In my view, this week's move gives this company a lot more long term upside potential. The suit against Google et al will come to a head this Fall- likely in the late September/October time frame.

Suppose they settle with Google for a pile of cash? You have a one time event in the stock, and where to from there?

This week's acquisition demonstrates there will be another life after the Google settlement-assuming there is one.

However, more importantly from a trading perspective, the bottom has been found. With the pricing of the funding at $3.25, VRNG has established what should be the low end for the stock. The company is still capable of issuing an additional $70 million in free trading shares at any price they like, but it's simply not done that way. They wouldn't undercut the pricing on the first $30 million.

Moreover, these institutional investors certainly were in position to take a hard look at this VRNG's upside, and ponied up their coin. An "implied endorsement" of the future. I'll take the liberty of assuming these funds were not looking to scalp a quarter on this one- they're looking for a bigger score.

The latest reported short interest on VRNG was nearly 3 million shares- last week's events could not have made those investors feel good about their position.

Friday's closing price of $3.44 is a few cents above the $3.25 paid- a great entry level for much higher prices. Now, with 90 million shares I&O, a second target in the cross hairs, and recurring revenues, look for a much more robust upside- perhaps $6 on Google, then who knows from there.