Tag Archives: Acacia Research Corporation

Shares of patent licensing cos were off in 2Q after a torrid start to year

After a record-breaking first quarter, public IP company shares (PIPCOs) under-performed most stocks versus the S&P 500 index in the second quarter.

Following a five-year leading return of 13.1%, vs. 0.8% for the S&P 500, the PIPX IP Sector Index of 13 patent licensing stocks fell in the second quarter -4.4% vs. a 1.9% gain the broader market index.

Bucking the trend was Marathon Patent Group (MARA), which was up 37.7% on settlement activity. Despite and increase in its shares of 16.1% in the second quarter, Acacia Research (ACTG) is rumored to be exploring combining with a pre-IPO business because of the difficult environment for patent licensing.

“Acacia may acquire a pre-IPO business, allow struggling IP business to wind down, former employees say.” reports the Patent Investor.

Q2 2016 Figure 2

“The value of $1 invested in the S&P 500 in Q3 2011 would now be $1.57 while the value of the same $1 invested in the PIPX would be $0.56,” says Dr. Kevin Klein, who compiles the PIPX for IP CloseUp,”

Q1 2016 Fig 2

Unwired Planet (UPIP) was the PIPX worst performer, down 32.3%. On April 7, UPIP announced that it was divesting its patent licensing business. 

The PIPX IP Sector Index is a capitalization-weighted, price-return measure of the change in value of this segment of publicly traded companies. This means that the performance of larger companies like InterDigital, Rambus and Tessera have a proportionately larger impact on overall index performance than swings in smaller public company shares followed.

For the full PIPX Index report for the 2Q, go here.

Q2 2016 Figure 3

Image source: PIPX IP Sector Index

Acacia shares off 20% on poorer than expected 3Q results

Acacia Research Corp. (NASDAQ: ACTG) was slammed in after-hours trading yesterday and is off 20% by noon today. The S&P 500 Index gained .66%.

The company reported that revenues were $12,994,000, as compared to $37,192,000 in the similar prior-year quarter. Its non-GAAP net loss was $11,458,000, or -$0.23 per diluted share, as compared to non-GAAP net income of $5,050,000, or $0.10 per diluted share.

The public IP licensing company, or PIPCO, reported revenue of $13 million in the period, which did not meet Street forecasts. Three analysts surveyed by Zacks expected $32.8 million.

Acacia Research shares have fallen 48 percent since the beginning of the year. In the final minutes of trading on Thursday, shares hit $8.79, aacacia_logo_lg fall of 42 percent in the last 12 months.

“Consistent with Acacia’s strategic shift towards a smaller number of higher valued marquee portfolios, our portfolio intake pipeline remains filled with deep and promising patents in the technology, automotive and energy verticals as inventors and companies seek out the best partner to navigate the increasingly complex patent licensing environment,” said Matthew Vella, Acacia Research Corporation CEO and President on today’s earnings call.

A transcript of today’s call can be found here.

Acacia’s third-quarter earnings release can be found here.

Image source: acaciaresearch.com

Leading IP stocks for 1Q include VRNG, RMBS, TSRA, VHC & RPXC

Despite a soft first quarter 2015 for the 13 IP licensing company stocks that comprise the PIPX IP Stock Index, versus the S&P 500, individual winners and losers that bucked the trend.

Vringo (VRNG), down 80.9% over the past 12 months, was up 18.2% in the quarter one, the most in the group. Also advancing were Rambus (RMBS) was up 13.4%, Tessera (TSRA) 12.6%, Virnetx (VHC)10.9% and RPX (RPXC) 4.4%.

Unwired Planet (UPIP), Acacia (ACTG) and Marathon (MARA) were down, 43.0%, 36.8% and 31.0% respectively for the quarter. For MARA it came after a stellar 2014 where it gained some 170%, so some profit-taking is not unexpected. InterDigital (IDC) also cooled off after a torrid 4Q 2014.

*****

PIPX under-performance relative to the S&P 500 was more muted in the first quarter. This appeared to be less a result of improving performance among PIPX sector companies as a group, than improved performance among a handful of larger Index leaders (Tessera and InderDigital), whose weighting impacted overall results (see final graph).  

Fig2
Vringo’s stock was beaten down significantly in the 2014 as the result of adverse decisions in court, so its gain is less impressive in relative terms. Its improved stock performance is either being considered by some investors as a positive harbinger, or the shares are enjoying a favorable bounce due more to traders than long-term investors.

The role of depressed patent values as a result of the American Invents Act, IPRs and proposed proposed additional anti-patent litigation legislation in poor PIPCO performance is difficult to determine. The likelihood is that investors are beginning to regard some companies as better capitalized and and more sufficiently equipped for the long hall, whatever the scenario.

Those larger players that appear to be in possession of sufficient numbers of good patents and licensing opportunities, appear to be the best position to perform over time.

*****

Fig3The PIPX Index, compiled exclusively for IP CloseUp by Dr. Kevin Klein, Director of IP Licensing at Freescale Semiconductor, is designed to provide a measure of the market value and health of the intellectual property licensing business. The index consists of 13 public companies all whose market capitalization exceeds $100M, whose primary focus of licensing and enforcement of patent intellectual property. The companies included in the index are listed in Table 1. Several of the companies’ market capitalization has fallen below $100M since being added to the index.

“The PIPX index starting from July 2011 through March 31, 2015,” says Dr. Klein. “Somewhat surprisingly, given the amount of interest and attention provided to IP licensing in recent years, the index trends down from July 2011 to about the middle of 2012 and from there has been relatively flat. This performance stands in contrast to that of the broader economy and of publicly traded companies in general.”

The 2015 1Q PIPX update can be found here.

Fig5

Image source: PIPX IP Sector Index, Q1 2015 Update

Patent Troll “Witch Hunt” Slammed; IP Litigation Tactics, Too

Companies and lawmakers who bash businesses that license patents got a dose of their own bitter medicine this week when their techniques were compared with those of fear-mongering, 1950s anti-communist demagogue Joe McCarthy.

“Villains of the new millennium” is how Jamie Siegel, an Acacia Research Group’s Senior Vice President, characterized the portrayal of non-practicing entities NPEs, also known as patent “trolls,” by those that stand to gain from their demise and who routinely disparage them in the press.

Speaking at the second annual Benchmark Litigation U.S. awards dinner in New York, Siegel was quoted in a story by reporter Michael Loney that appears in the Managing Intellectual Property blog as saying.

“[J]ust as McCarthyism sought to unfairly tag so many with the ‘red’ moniker, Congress, the press, many giant software companies, and even our president, today Jaime-Siegel-retouchedseek to slap the moniker of ‘troll’ on attorneys and business people who are doing nothing more than monetising assets that they own – assets whose very existence is protected by Article 1 Section 8 of our Constitution.” Siegel joined California-based Acacia from Sony last year.

Siegel added that the hysteria around NPEs has been further inflamed by a lack of knowledge, including from the U.S. president. He said Barack Obama showed a lack of understanding when he issued executive directives to change the patent system. Contrary to public perception, he reminded the audience of lawyers, NPEs are good for innovation.

[Gene Quinn in IP Watchdog ran well-linked piece this week that took a deeper look at the sources of NPE-bashing, “Obama on Patents: The One-Sided USPTO Patent Ligation Beta.”]

*     *     *     *     *

In a separate but related development this week, Hon. Randall Rader, Chief Judge of the Court of Appeals for the Federal Circuit (CAFC) provided his strongest and most vocal defense of patent holders’ rights to date.

At a global IP conference in California Law.com reported that he said that  the problem of so-called patent trolls really boils down to a problem of excessive litigation costs. And it’s lawyers who are driving up those costs by spending millions on discovery in search of elusive “smoking-gun” documents.

“You yourselves should be going to your trial judges and requesting restrictions on discovery,” he added. “We cannot tolerate $3 million in discovery expense.

randall-r-rader2While chastising lawyers Judge Rader did not challenge their clients who can afford to pay the exorbitant legal bills and make it increasingly difficult for plaintiffs to file a legitimate complaint. No mention was made of the role recent legislation, which effectively forces holders of even the best patents to sue first to get the attention of an alleged infringer and prevent a declaratory judgement, and negotiate a license later.

“The problem isn’t the patent system. The problem isn’t even trolls,” Judge Rader said, and any effort to single them out will inevitably penalize universities, research clinics and other legitimate contributors to the U.S. innovation system.”

Doug Croxall, CEO of Marathon Patent Group (MARA), a patent licensing and management company, said that “the focus should be on patent quality not ownership. Many companies are unaccustomed to having good patents enforced by knowledgeable parties. We need to embrace good inventions, not fear them.”

Image source: daylife.com/photo/09r76Bpdgh003; patlawcenter.pli.edu; acaciaresearch.com

Wall Street to Patents: "We Love You, Man"

IP Cash is King Right Now –

JP Morgan analyst Paul Coster takes a long look at Acacia Research Corporation (NASDAQ: ACTG), a company that barely survived 2003 that Wall Street currently values at $1.5 billion. He generally likes what he sees.

My look at Coster’s 44-page report in the upcoming IAM magazine, out June 1, regards an equity analyst who specializes in computers and peripherals trying to get his arms around a nascent industry built on uncertainty, lumpy returns and unaccustomed to public scrutiny.

*     *     *

Wall Street’s love-hate relationship with IP rights is heating up. It remains to be seen whether this is an enduring marriage, momentary fixation or potentially dangerous obsession.

Is public ownership of patent licensing (or patent defense) an oxymoron? While they are unproven business models, there is good reason to believe that public patent companies will enjoy a symbiotic relationship with each other and can serve as an alternative to some high cost litigation.

For better or worse, some of the smartest underwriting money is bullish on the patent business.

By racking up a critical mass of patent settlements and some forward-looking licenses Acacia has caught the attention of mainstream investors. With the help of Barclays Capital (RPX co-underwriter), the company recently raised another $175 million in a stock offering. (Goldman Sachs and Allen & Co are other RPX backers.)

*     *     *

In an industry that prides itself on the ability to discount almost any type of risk, Wall Street currently finds IP-centric companies such as Microsoft and IBM interesting; those that license patent rights as their primary source of income it finds tantalizing.

The difference is in the financials, especially operating margins, which can be double or higher than those of the average S&P 500 company.

For the JP Morgan report on Acacia, click here. You will have to wait a few weeks for IAM 48 and The Intangible Investor column addressing public ownership of patent licensing.

*     *     *

Acacia CEO Ryan to Speak to Investors

FYI: Acacia Research Corporation Chairman and CEO, Paul Ryan, will discuss the growth of Acacia’s patent licensing business at the JP Morgan 39th Annual Technology, Media and Telecom Conference being held at the Westin Copley Place in Boston. Ryan’s presentation will take place on Wednesday, May 18, 2011 at 9:20 AM (EDT). It will be webcast live at http://www.acaciaresearchgroup.com/events.htm.

Image source: zonebourse.com-Thomson Reuters


%d bloggers like this: