Want to know what separates a mid-level financial advisor from a
major Wall Street hedge-fund manager?
The ability to discern opportunity before the rest of the pack...
It's something not many can do, especially when it comes to
investing... It takes a curious alchemy of financial understanding,
subject-matter expertise, curiosity, synergetic aptitude, creative
imagination and good, old-fashioned entrepreneurship...
If you want insight from this sort of brilliant mind, then I
suggest reading Andy Kessler, the former hedge-fund manager.
But if you want to watch an entire firm with these sorts of
qualities, the best place to look is Kleiner Perkins Caufield &
Byers -- one of the most successful
firms in the world. (A venture capital firm provides financial
capital to early-stage, high-potential growth startup companies)
I won't talk too much about Kleiner Perkins, the firm's track
record speaks for itself... It was an early investor in
Electronic Arts (Nasdaq:
, Genentech and Intuit, just to name a few.
Then in 1999, long before "Google" was even a verb, Kleiner Perkins
paired with Sequoia Capital and paid $25 million for 20% of the
search engine --
is now worth about $200 billion today.
All told, if you add up all of Kleiner Perkins successful ventures,
they have produced 250,000 new jobs, brought in more than $100
billion in new revenue, and created more than $650 billion in
As the chief investment strategist behind
, I like to see where firms such as Kleiner Perkins are parking
their cash -- their long history of savvy investment success is
chief among its several areas of distinction.
Right now, Kleiner Perkins invests in four distinct areas:
Greentech, China, Digital and Life Sciences... But an overwhelming
number of their success has come from high-flying tech start ups.
And after looking through some of Kleiner Perkins most recent
investments, I think they may have found another future success
RPX Corp. (Nasdaq:
, or "Rational Patent."
Rational patent is ultimately a response to the growing trend of
patent litigation. If you follow financial news, then you're likely
aware of how important having access to the right patents has
become, especially for tech companies.
In fact, the need for patents led Google to buy out
telecommunications giant Motorola for a whopping $12.5 billion in
2011. By purchasing the telecomm leader, Google gained access to
Motorola's roughly 25,000 patents.
All-in-all, in 2010, a total of 2,727 patent lawsuits were filed,
according to Rational Patent. In the first quarter of 2011 alone,
another 918 hit the courts, which works out to annualized growth of
35% in one year. It's a messy business with an extreme amount of
Companies with patent concerns can manage this risk by buying a
membership in Rational Patent.
RPX holds a portfolio of some 1,600 patents -- nearly all of them
from marquee names from the high-tech sector -- and clients pay
RPXC $60,000 to $6.6 million a year to license all of the patents
and thus avoid trampling on anyone else's proprietary technology,
whether inadvertently or on purpose.
Rational Patent then uses its revenue to buy more patents, which
attracts more members, and so it goes.
There are about 2,500 companies that could benefit from a
membership, which gives RPX a huge amount of growth potential. That
is reflected in its top line: Revenue is growing at a phenomenal
What's more, happily, the company is profitable and has no
. With a
of $640 million and annualized 2011
of about $30 million, RPX is trading at 21.3 times
, or roughly equal to the
Nasdaq Composite Index
Risk to Consider:
Let me warn you though, like any growth stock, investing in
Rational Patent carries significant risk, because the company
trades as a small-cap, you can expect greater volatility when the
Action to Take -- >
But, if you're an aggressive investor looking for a stock with big
upside potential, then I think Rational Patent could be a smart
The patent war has only just begun... And with a firm like Kleiner
Perkins Caufield & Byers backing its finances, Rational Patent
could be primed to take full advantage of this growing trend.
Andy Obermueller does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.
© Copyright 2001-2010 StreetAuthority, LLC. All Rights Reserved.