Can Finjan Holdings, Inc. (NASDAQ:FNJN) Continue To Gain Strength?

Finjan Holdings, Inc. (NASDAQ:FNJN) was a big winner in the small cap space on Tuesday.The company kicked off the session at around $1.83 a share and, by close of play, had risen to $2.24 apiece – a 22.4% appreciation.We haven't seen any news hit press so far this week but a couple of factors are combining as likely drivers behind the upside move.Management announced last week that it was set to hold a conference call on November 9 (tomorrow) to discuss the company's third-quarter 2017 results and to serve up a parallel business update. There is a good chance, then, that markets are loading up on Finjan shares ahead of whatever potentially catalytic insights the company's management team will provide on the call. FNJN Daily ChartAt the same time, we are also seeing a bit of promotional activity surrounding Finjan and its subsidiaries this week, meaning a portion of the gain seen yesterday is likely driven purely by speculative buying as the ticker pops up on the radar of traders that keep an eye on this sort of promotional activity.When a stock is being promoted it is generally a red flag, but we have had some great results in the back of our promotion strategy – that is, take a look at a company that is running on some promotional activity and try to figure out whether it's rising solely on a promotion or whether there is any fundamental reason for the gains (and, in turn, a likelihood that the appreciation will hold and support further advance).In other words, promotional activity isn't always bad; at this end of the space, some degree of investor relations can be critical to being able to fund operational development.So what is the case here?Well, we took a look at Finjan and, put bluntly, we like what we see.The company is a patent play, meaning it acquires and monetizes patents generally targeting big-name technology companies. This sort of company isn’t everybody's cup of tea and – for good reason – is often seen as a stymie to technological innovation. This seems counterintuitive but when you consider that some of the patents that these sorts of companies are trying to enforce are decades-old and the argument underpinning their enforcement is often only loosely connected to the newer applications of the patent being targeted, it makes sense.With that said, however, for many, the ethical implications of this sort of activity don't matter. The companies can make an awful lot of money on the back of often very little capital outlay and – for traders and investor interested in nothing but returns – that's a strong investment thesis.So what are we looking at specifically with Finjan as supportive of a long sided argument?The company has around eight outstanding pending lawsuits right now, each of which could serve to inject some royalty-based capital onto its balance sheet. It is currently licensing or enforcing 53 patents and has another 18 patents pending in the US.Last year, Bluecoat (owned by Symantec Corporation (NASDAQ:SYMC)) was ordered to pay $40 million based on its infringement of one of the Finjan patent portfolios and this payment is currently under appeal. The outcome of the appeal could be a major upside driver for the company and, back in September, we learned that Bluecoat was unable to challenge five Finjan patents associated with the initial trial and, by proxy, the appeal.If the outcome of this appeal is favorable for Finjan (and, right now, there is nothing that suggests it won't be – Bluecoat even has the $40 million in an escrow type facility ready to pay out), then Finjan is going to run, likely above and beyond five dollars (the company currently trades at $2.24).There is also a suite of patents on the back of which the company is targeting International Business Machines Corp. (NYSE:IBM) and we are going to be watching closely for any insight into proposed strategy on the conference call tomorrow.As is often the case at this end of the market, cash balance and dilution are a risk here. While the company had $39 million cash on hand at the end of June, patent litigation can be expensive and drawn out so an investor can never guarantee that they won't be diluted before the next royalty based windfall comes in.We will be updating our subscribers as soon as we know more. For the latest updates on FNJN, sign up below!Image courtesy of Brian Turner via FlickrDisclosure: We have no position in FNJN and have not been compensated for this article.