RPXC

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Hey guys. Recently, I came to notice this company. RPX Corp (Ticker: RPXC). In short, they do patent risk management and I believe they are the only one in the space. This company seems to have tremendous potential as it seems that it can benefit greatly from economic of scale. Revenue growth has exceeded COGS growth and I can see why given the nature of the business. Extrapolating revenue growth and COGS forward, I can see profit margin expand tremendously and I believe this post a great opportunity.

HOWEVER, there are some concerns that I wish to address and I am wondering if fellow monkeys would be able to assist me.

1) While I guess I get the gist of the business, it is still speculation. I still do not have a clear understanding of what the business does.

2) While it is true that they are the first in the business, the company doesn't seems to have a moat around the business and is liable to have its growth cut if new entrant enter the market.

3) Does potential future litigation post a great risk to the business? Imagine Apple sue the company. If that is so, current profit margin is just an illusion as they are merely deferring potential losses into the future. At least this is how I understand the business.

Comments (9)

 
Jun 13, 2013 - 9:30pm

Using the Graham growth formula, somehow, I get that this company is worth over $70. Current price assume a little below 4% annual growth rate. NCAVPS of $3.08 and have been steadily accumulating @ 10% quarter on quarter on current level of CF, if CF expands, NCAVPS will rise exponentially. 0 debt.
However, one should note that I am still in high school.

 
Jun 14, 2013 - 8:31am

JasonLoh:

Hmmm...I do not think this is what RPX does. It seems to me that they are more centric around defense than offense, which explains its steady CF.


Could be... However, you may wish to clarify whether the recent regulatory push to restrict the activities of the NPEs applies to this company.
 
Jun 14, 2013 - 8:37am

Martinghoul:

JasonLoh:

Hmmm...I do not think this is what RPX does. It seems to me that they are more centric around defense than offense, which explains its steady CF.

Could be... However, you may wish to clarify whether the recent regulatory push to restrict the activities of the NPEs applies to this company.

Hahaha...I have no idea!!! That is why i am posting in WSO, to get more ideas. Mind sharing more on this restriction and how it might affect the company?

 
Jun 14, 2013 - 10:34am

JasonLoh:

Martinghoul:
JasonLoh:

Hmmm...I do not think this is what RPX does. It seems to me that they are more centric around defense than offense, which explains its steady CF.

Could be... However, you may wish to clarify whether the recent regulatory push to restrict the activities of the NPEs applies to this company.

Hahaha...I have no idea!!! That is why i am posting in WSO, to get more ideas. Mind sharing more on this restriction and how it might affect the company?


Me? I have no friggin' clue, but I do know there's some sort of legislative effort in the pipeline. You can get more details here, for instance: http://www.jdsupra.com/legalnews/white-house-announces-initiatives-agains-53965/

How that applies to this particular company, I ain't got the slightest...

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