Every year major film and music companies, along with the artists they represent, lose millions of dollars to internet piracy. Between now and 2016 alone, an estimated $2.3 billion in illegal downloads will take place on the internet, usually with little or no consequence to the downloader—and sometimes to the great financial benefit of the unauthorized download sites that sell heavily-trafficked and highly profitable ads on their sites.
As I wrote in part one of this series, a small company in California called RightsCorp, Inc. , trading over-the-counter under the symbol RIHT, is already executing a paradigm-shifting approach to stop this rampant pirating and monetize the process at the same time. Strikingly—unlike the vast majority of over-the-counter issues—RightsCorp is rapidly growing its revenue stream in the process, in addition to actively expanding its portfolio of copyright-represented properties and proprietary patents protecting its technology.
If it sounds too good to be true, well, it isn’t. In fact, RightsCorp already has a deal in place with Warner Brothers to pursue and protect the copyrighted music of dozens of that company’s high-profile artists—as well as agreements with other giant industry players, including Round Hill Music, Shapiro/Bernstein, The Orchard and BMG Rights Management. For reference, BMG alone is the world’s fourth biggest music publisher, repping such household name artists as Bruno Mars, John Legend, David Bowie and MGMT.
RightsCorp’s approach is both simple and elegant. Its technology system monitors peer-to-peer file sharing networks. When it detects copyright infringement activities of the works controlled by the companies it works with, it records the date, time, copyright title, and other unique identifiers of the action. When it detects someone illegally distributing those items through an Internet Service Provider RightsCorp does business with, RightsCorp advises them of the violation and requests a $20 settlement for the copyright holder. If the “pirate” declines to pay the $20, they become liable for a larger fine and being dropped by their Internet Service Provider.
To get just a snapshot of the massive market RightsCorp is primed to exploit, file sharing traffic has grown by 40% and illegal movie downloads have grown a gargantuan 800%. . In 2013 alone, an estimated 143 billion separate illegal downloads took place. Even software giants like Microsoft and Adobe are vulnerable, with industry estimates placing the number illegal downloads of those companies’ software products at more than 80% of the total! That easily translates into tens of millions of dollars per year
Judging from recent trading action in RIHT shares, market participants are beginning to stand up and take notice. Just about a “zero trader” since the company’s October financing deal was reached, trading interest picked up slightly in RIHT in January, after shares had been trading in a tight and uneventful $0.50 – $0.75 channel for about three months, cracking the $0.80 cent mark briefly only once before pulling back. That’s changed recently—especially over the past five trading sessions at the end February—when more than 1 million RIHT shares changed hands on three occasions, and almost that many on the other two.…
As the United States withdraws from its role as the world’s only superpower, and leaves a vacuum to be filled by Heaven knows who, you can count on instability becoming the watchword of the foreign affairs lexicon.
And whether this was done unintentionally, as result of inexperience, or was outright malfeasance, or was rather part of a general foreign policy repositioning that recrafts the U.S. as a more insular, domestically oriented nation, less inclined to police the world’s troubled regions, is really of no consequence. Because the perception that America is less willing to use its power – unwilling even to project it – creates the reality that daddy’s left the house.
There ain’t gonna be no spankings.
We can do whatever we want.
But will it be all bad for stocks, is the question.
And the truth is, it may have a rather salutary effect on American shares.
Why? Because the two seminal facts that underpin today’s global financial reality are –
1. a vast pool of liquidity, and
2. a growing geopolitical turbulence, as mentioned above.
And that could well draw large sums of money to American shores in a hurry.
So long as we’re still figured the last bastion of (relative) economic stability, and we’re posting numbers that are (more or less) positive, that should remain the case. In a climate of insecurity, it doesn’t take much to attract large capital flows, and fortunately, America is still perceived as the world’s dominant business power, even if her military and diplomatic prowess is being diluted.
How to play it?
The answer to that riddle is equally simple. The cheapest way to get the most leverage out of a rising U.S. market is to purchase deep-in-the-money CALLs on the indexes. Deep-in-the-money options minimize the time value of the instrument, giving us more dollar-for-dollar value for our options purchase.
Note, too – this is a trade to which you can allocate more money than you normally would for the weekly options trades we suggest. On a regular basis we recommend you commit no more than a percent or two of your overall portfolio. But here, we say that a deep-in-the money CALL of this nature, and for this purpose, should be considered a core holding, and we see no problem in designating seven or eight percent of your investment worth here – and if you’re young and can afford to take on more risk, up to ten percent.
We’re going to look at two options today that fit the bill, the SPDR Dow Jones Industrial Average ETF (NYSE:DIA) and the PowerShares QQQ Trust (NASDAQ:QQQ), a proxy for the NASDAQ 100. We choose this pair for a couple of reasons, both tactical.
First, diversifying gives us a better chance of avoiding disaster. And second, these two indexes are more concentrated than the S&P 500.
The DIAmonds represent a mere 30 stocks, while the Qubes hold just 100 – though the truth is the latter is so heavily weighted toward the oversized, monster issues that comprise it that, in essence, only a dozen or so stocks control the destiny of the whole ETF.…
For years entertainment industry giants like Warner Bros., BMG Music and a host of other companies have struggled with ways to come up with an innovative solution to the ubiquitous and multi-million dollar problem of online privacy. To give you an idea of what’s at stake, since the world’s first high-profile online file-sharing site Napster debuted the internet in 1999, music sales revenue declined by a whopping $6.3 billion over the next 10 years.
Until now, artists and their representatives have been relatively powerless to stop the theft of their intellectual property. I say “until now” because there is one highly compelling under-the-radar company, Rightscorp, Inc. (RIHT), which is currently making game-changing breakthroughs in both controlling online piracy and recouping the money that otherwise would be lost to the original creators of the intellectual property. In fact, Rightscorp has already partnered with Warner Bros., BMG and a host of other major players in the industry in the process, along with over 50 large Internet Service Providers (ISPs), including five of the 10 biggest ISPs in the U.S., to do just that.
Founded in 2011 and based in Santa Monica, California, Rightscorp, Inc., operates as a technology company that has a patent-pending proprietary method for collecting payments from illegal downloaders of copyrighted content. The company’s technology system monitors peer-to-peer file sharing networks and notifies ISPs of their customers’ copyright infringement activities with date, time, copyright title, and other unique identifiers.
While piracy losses have been staggering for music and other entertainment companies, Rightscorp’s proprietary technology has positioned the company to take advantage of the equally massive market opportunity to recover them. In fact, Rightscorp estimates that by 2016 alone about $2.3 billion of illegally downloaded files are ripe for monitoring and monetizing. Perhaps most significantly, Rightscorp has first mover advantage in this giant niche market, as the first and only company to team with both high-profile major entertainment companies and ISPs to generate a steady revenue stream.
Specifically, Rightscorp’s specialized software frequents major peer-to-peer sites. When it detects someone distributing items they don’t have the rights to—especially a repeat offender—they’ll send them a letter advising them of the violation and requesting a $20 settlement for the copyright holder. If the “pirate” declines to pay the $20, they become liable for a larger fine and being dropped by their Internet Service Provider.
There are several distinguishing factors that make Rightscorp’s business model so appealing. Not only does the company directly benefit artists and their reps, it also offers ISPs a modicum of protection against copyright infringement suits—something those companies can be held liable for by being a conduit for pirated files. Rightscorp also has no inventory, no manufacturing costs, and its approach is just about unlimitedly scalable—constrained only by the number of copyrights it has the green light to enforce.
Impressively, Rightscorp is already tracking a portfolio of more than 1 million separate copyrighted entities, and is actively negotiating with additional major music and film industry companies to quickly expand that number. Going forward, the company’s ability to increase the number of copyrights it monitors—determined in part by the number of ISPs the company works with—is key to its business-model and to the monetization of copyright enforcement on behalf of those copyright holders.…
We’ll lead off today with a trade that’s moved nicely for us.
We opened it on January 20th in a letter called The Facts and the Fix on FCX. There, we urged you to consider two separate actions on mining giant Freeport MacMoRan Copper and Gold Inc. (NYSE:FCX). The first was a longer term PUT purchase – we suggested the August 25 strike – and the second was the sale of a near term bear CALL spread to pay for the PUT.
And how’d it work out?
We closed out the PUT two weeks later in a letter called Golden Cobras and were rewarded handsomely for our efforts. The cost of the PUT was $0.27 and the sale brought in $0.55. That’s a net profit of $0.28 per option traded – over 100%.
And the spread?
As of last Friday’s options expiry, our spread expired worthless, putting the full $0.29 premium securely into that cute, little satin bag we keep in our pocket.
Altogether, that’s $0.57 clean, on no money down, for every trio traded.
And the satin bag grows heavier.
For those who’ve been following, you’ll remember that we wrote the FCX trade to recoup some lost funds on an earlier FCX PUT purchase that we made in 2013. So in that, we were successful.
But there’s still money to be made on FCX today, and for the selfsame reasons that we highlighted back in January when we launched our most recent effort.
Have a look at the long term (weekly) chart of FCX, and you’ll see what we mean –
First, the chart shows a decline that has been relentless since it peaked just over three years ago. Over 50% of the stock’s value has been shaved off, and we believe there’s more to come.
But what’s worse is the following – as of last week, the weekly moving averages have all rolled over and are beginning to unfurl (blue box above, and enlarged, below).
This is bad news, as it puts a set of designer cement shoes on the stock at roughly $37.
And if that weren’t ominous enough, we also have a continued slide in volume (in black) and a Relative Strength Indicator (RSI) that’s been sub-waterline for a month (red circles). The instant MACD confirms – which could be as early as this week – we could see tremendous technical selling in FCX.
But wait! – It gets worse!
Adding to the stock’s woes is the condition of the commodities as a whole, which, after a very steep rise, have taken to looking very toppy, and are due for a rest, if not an outright decline.
Look here –
This is the PowerShares DB Commodity Index ETF (NYSE:DBC), up nearly seven percent in a month and looking exhausted after RSI had a brush with severe ‘overbought’ (blue square).…
It’s likely that if you’ve driven by a set of oil rigs, you’ve seen flames licking up from the top of each rig—a phenomenon called “flare gas.” An associated offshoot of oil drilling and production, flare gas is widely considered one of the most challenging energy and environmental problems in the oil and gas industry, wasting approximately 150 million cubic meters of natural gas per year, and depositing about 400 million metric tons of Co2 greenhouse gases emissions into the atmosphere.
The company I want to bring your attention to today has just obtained exclusive U.S. rights to a technology that provides a solution to this widespread, but relatively under-the-radar issue. Its name is Well Power, Inc., trading over-the-counter under the symbol WPWR, and is currently laying the groundwork to advance that technology in the vast oilfields of Texas—and ultimately internationally.
The technology Well Power has acquired the rights to is called MRU, short for Micro-Refinery Unit, designed to process raw, natural flare gas into “green fuels”—including diesel and pipeline quality crude. If successfully deployed, MRUs will also create a new revenue stream for oil producers with limited capital expenses, and simultaneously reduce Co2 emissions.
According to Well Power, the MRU is an assembly of proven commercial technologies with a proprietary micro-reactor system for hydrocarbon processing and catalytic reactions. This novel system is the key technology component that enables MRUs to be economically viable, easily transportable, and highly scalable to fit the varied configurations of existing oil production infrastructure. Designed to be skid mounted, MRU units will have the ability to process natural gas flows of 75 – 250 McF, first converting them to methane and condensates prior to their emergence as GreenFuel.
Well Power’s license agreement allows the company to provide MRU technology with full-service engineering, design, modular fabrication, maintenance, and construction management services to clients in the upstream areas of exploration and production. Well Power will also provide consulting services, process assessments, facility appraisals, feasibility studies, technology evaluations, project finance structuring and support, and multi-client subscription services.
In late January Well Power announced that it will be targeting the state of Texas to launch its technology as a solution for flaring, venting and shut-in waste. Initially, the company will seek partnerships with active oil and gas operators to understand their unique wasted gas characteristics. Through these partnerships the company plans to work towards the deployment of a Micro-Refinery Unit pilot project in accordance to its development schedule as disclosed in its SEC filings.
Texas is in Well Power’s crosshairs not only because it’s an enormous oil-producing territory, but also because the state’s current regulatory environment towards flaring is increasingly restrictive and should provide the company an opportunity to gain support for its technology. “The company’s timing is excellent as it enters a market which is facing a crack down on the flaring of wells by the oil and gas drillers by the Railroad Commission of Texas, which is the regulatory body which oversees the oil and gas industry in the state,” said Dan Patience, Well Power President.…