Many people like to follow what institutional and hedge funds are buying, selling and shorting. So I began looking over some patent companies that have been making some waves lately. These companies are VirnetX Holding Corp. (VHC), Vringo Inc. (VRNG), ParkerVision Inc. (PRKR), MGT Capital Investments, Inc. (MGT), Wi-Lan Inc. (WILN) and Document Security Systems, Inc. (DSS).

For any new investors out there, short interest is an indicator of what short sellers think about a particular stock. Selling a stock short is a practice of selling securities that are not currently owned, with the intention of buying them back ("covering") at a lower price. Short sellers assume that they will be able to buy the stock back at a lower price than when they first paid for it.

If short interest increases, then shorts are betting that the price of the security will be going down. However, if short interest decreases, then shorts are betting that the price of the security is near the bottom and will likely be going back up. Many investors use short interest to make predictions about the direction of a particular stock and to measure the bullishness or bearishness of it. Below is a table of the short interest increases of the following companies.

*Data from Nasdaq.com

As you can see from the table above, short interest has steadily increased over the last couple of months in these stocks. So why are shorts increasing their positions? There could be many different reasons as to why, so a good question to ask yourself in this situation is what do the shorts know that you don't. Let's take a look at the companies to see what has transpired for the rise in the short interest.

VirnetX Holding Corp.

VirnetX develops software and technology .......

Vringo, Inc.

Vringo engages in the innovation, .......

ParkerVision Inc.

ParkerVision engages in the design, .........

Wi-Lan Inc.

Wi-Lan engages in the acquisition, development and licensing of technology intellectual properties. The company holds and licenses a portfolio of patents that implement a wide range of technologies, including wireless access, wireline access and digital television, as well as patents pertaining to semiconductor, digital storage and antennae technologies. It has approximately 3,000 issued or pending patents, and 260 licensees.

Wi-Lan's short interest has steadily been increasing since the start of the year. On January 15, 2013, Wi-Lan had short interest of 40,000. Three months later, Wi-Lan's short interest has climbed to over 266,000, representing an increase of over 600%. The short float now stands close to 22% with the days to cover ratio at 14.93 days.

MGT Capital Investments, Inc.

MGT engages in the business of monetizing ........

Conclusion

Because these are speculative stocks with high short interest, investors can be sure to count on lots of volatility and wild price swings. News of any sort can send these stocks sky high or crashing to the ground. Investors are always reminded that before making any investment, you should do your own proper diligence on any stock mentioned in this article. Any material in this article should be considered general information, and not relied on as a formal investment recommendation.

http://seekingalpha.com/article/1395801-short-interest-keeps-rising-in-these-patent-plays?source=email_rt_mc_related_0