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Is Vringo, Inc. (VRNG) About To Make An Insider A Three Time Winner?

 June 25, 2013 12:34 PM

(By Rich Bieglmeier) Vringo, Inc. (VRNG)  "is set to join the Russell 3000® and Russell Global Indexes when Russell Investments reconstitutes its comprehensive set of U.S. and global equity indexes on June 28, 2013, according to the updated list of additions posted on June 21, 2013 and available at www.russell.com/indexes."

While the news is certainly good, it's not the best news we've seen from the intellectual property, tech company. Last week, two insiders opened their respective checkbooks and bought company stock.

[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]

Chief Financial Officer, Ms. Anastasia Nyrkovskaya bought 7,000 VRNG shares at $2.93 for a total investment of $20,510. iStock likes it when CFOs buy, they are the numbers crunchers, accounting geeks who understand the company's finances probably better than anybody else. When the smart ones buy, we pay attention.

Ms. Nyrkovskaya was joined by Director Noel Joseph Spiegel who bought 15,000 VRNG shares for a total investment of $45,000. Spiegel's and Nyrkovskaya's buys broke an uninterrupted string of insider selling that dates back at least two years.

One of the practices iStock like to employ is looking at the track-record of past purchases to see how good of a "stock picker" the insider has been. The best we can tell, Nyrkovskaya has no previous history, but Spiegel made to earlier buys as a Director for Radian Group Inc. (RDN) and American Eagle Outfitters, Inc. (AEO).

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How did he do?

In August 2011, Spiegel purchased AEO for $10.40 per share. He bought RDN three separate times with a max price of $2.29. You can look above to see where both are today. Bet you wish you followed along, no?

Besides joining the Russell 3000, plenty of potential upcoming news events/announcements, could make Spiegel a three time winner.

In Vringo's ongoing battle patent with Google (GOOG) over the technology "behind" Adwords, Judge Raymond Jackson could rule any day on ongoing royalties – if any - Google would have to pay to Vringo.

Longer-term, Vringo recently filed a lawsuit against ZTE in Australia. ZTE Corp. (ZTCOY.PK) is China's second-largest maker of phone equipment and the world's 4th largest mobile phone manufacturer.

According to the lawsuit paperwork (see page 5), Vringo is willing to license its technology to ZTE for $2.50 per smartphone, along with various other fees. China Daily reports that ZTE's goal is to "increase smartphone shipments by 50 percent this year with a focus on high-end phones that run on fourth-generation, long-term evolution, networks. ZTE's smartphone shipments more than doubled to 35 million units last year, from 15.8 million in 2011" A little preliminary math and we come up with $87.5 million as a possible figure for 2012 without any 50% increases going forward or previous years.

It's impossible to predict what a jury will award or which side they'll favor, but big money is at stake in the event of a settlement or a Vringo court victory. With 21% of VRNG's float (stock available for trading) sold short, any whiff of a ZTE settlement or Google royalties could make Spiegel and Nyrkovskaya big winners.


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