Wi-Lan Inc. (WILN)

Wi-Lan Inc., along with its subsidiaries, engages in the acquisition, development, and licensing of technology in the communications and consumer electronics markets. The Company has approximately 3,000 issued or pending patents, and 260 licensees. Wi-Lan is headquartered in Ottawa, Canada and has a market cap of around 380M.

Here are some of the reasons why I like the Company in 2014.

1) Settlements and partnerships continue to roll in

2) Insiders keep buying shares

3) It pays dividends (4.50%)

I know what you are probably saying to yourself..."this is a horrible chart, what is this guy thinking?" Yes, there is no denying that this chart isn't the prettiest to look at. However, that doesn't mean things can't turn around this year as more catalysts come Wi-Lan's way.

Shares were stuck in a downtrend last year due to patent infringement cases not going the Company's way. Of course when they do go in favor of the Company, things will have the opposite impact. James Skippen, CEO of Wi-Lan talked about the setback last year with its case against Apple.

"... We obviously disagree with this decision, and we plan to take actions to address what we consider a mistake. This case involves one patent in our portfolio over 3,200 patents in applications, and Apple has been unnoticed for infringing this and other patents for many years, potential royalties owed to Wi-Lan are not limited to this patent."

After it was announced that a jury found that Apple did not infringe on Wi-Lan's patents, investors quickly sold off the stock. I believe that shares were oversold and feel that shares are still highly undervalued.

The Company told bloomberg news that they strongly believe in its current business strategy, and its share price doesn't take into account its strong balance sheet, the value of signed license agreements, business prospects or the residual value of its broad intellectual property portfolio.

I absolutely agree with the Company and feel that shares are undervalued and do not accurately reflect what the Company currently has as well as what's on the horizon.

With a market capitalization around 380M, almost 40% of Wi-Lan's value can be explained just by its cash. Meanwhile its software, patents, trademarks, existing and future licenses, etc., are being valued at just 60%.

Of course actions speak louder than words, so what have insiders done over the last year or so? Insiders have put their money where their mouth is and have continued to purchase shares.

Over the last couple of months Wi-Lan has signed agreements with Panasonic, InfoSonics, HTC, Toshiba, BlackBerry (BBRY), Alcatel-Lucent (ALU) and Hewlett-Packard (HPQ) just to name a few. The agreements will continue to provide revenue growth for the Company as the chart below shows.

*2014 full year estimates range between $96M-$98M

It is important to note that the agreements resulted in the dismissal several litigations. As a result, the cost of litigation will decline significantly and will certainly improve the top and bottom lines going forward.

With a conservative forward P/E of 15, shares of Wi-Lan should fetch a value of around $6.15 per share. I feel this is reasonable considering the fact that other IP companies have values of such without even bringing any revenues in, unlike Wi-Lan.

http://seekingalpha.com/article/1948381-these-4-small-cap-stocks-should-produce-big-gains-in-2014?source=yahoo