Patent aggregators, like Acacia Research Corp (NASDAQ:ACTG), create liquidity, transparency and pricing signals to all participants. Acacia Research is a Non-Practicing-Entity – which basically means it buys, sells,and licenses patents, but doesn’t actually use its patents directly by manufacturing products / services.
Acacia Research Corp (NASDAQ:ACTG)’s goal is to add value through the management of a portfolio of assets through fundamental research, due-diligence, and deal-making in an effort to deliver good risk-adjusted returns in an inefficient market that is complex, illiquid, misunderstood, and ever-changing.
Acacia Research Corp (NASDAQ:ACTG) gets paid by monetizing IP for its clients and its owned portfolios. It coordinates campaigns and licensing programs and uses litigation as a backdrop to future agreements; however, as market matures and becomes more fluid there is less friction and less litigation.
According to a recent interview, Corsair Capital's founder Jay Petschek did not plan to be a hedge fund manager. After holding various roles on Wall Street, Petschek decided to launch the fund in January 1991, when his family and friends were asking him to buy equities on their behalf. He realized the best structure for Read More
Business: A leader in patent licensing
- Has 274 IP portfolios that have led to thousands and controls tens of thousands of patents
- Only 154 of their portfolios are licensed (most just partially with plenty of runway), creating a strong pipeline for revenue growth
- Selectively increasing AUM through structured partnership deals and focusing on +NPV portfolios drive excellent returns on capital
- Acacia Research Corp (NASDAQ:ACTG) is one of the most active active dealers in secondary markets
- Investments / partnerships in mobile, location-based-services, computer power management, flash memory, telematics, data storage has yielded great returns on capital
- Recent diversification into medical technology, automobile technologies and energy has huge potential
Investment philosophy: Value
- They think like asset managers with an ROI mindset
- Not looking for home-runs; mainly singles and doubles
- Better information, brokers and market makers are emerging creating efficiencies in market.
- Acacia seeks portfolios that will provide predictable licensing revenues over uncertain litigation – which can be costly, time-consuming and incredibly unpredictable
- Look to deploy capital, ink-deals and approach settlements taking into account timing of monetization / cashflows and magnitude (build DCF’s for portfolios)
- IRR and NPV focused
- Eat risk-adjusted returns
Acacia: A Market Maker And Asset Management Company?