Recent Weakness In Acacia Research Presents Buying Opportunity
SeekingAlpha article basically makes the same points I made here. The so-called Shield Act will not negatively impact Acacia and will probably improve their business. The Shield Act is an attempt to prevent frivolous lawsuits and requires the plaintiff to pay the defendant's legal fees if the plaintiff loses. That is irrelevant to Acacia who didn't go to court once in 2012. And, in the event they lose, the $3-5M fee is just a cost of doing business, a small percentage of the $50-100M settlements they are working for. All-in-all, it is a very small issue.
In the conference call, Matt Vella stated:
"Our view put simply is that we did not think that either aspect of the regulatory environment, the American Invents Act, or the DOJ hearings will have or should have any net impact on our business.
The American Invents Act, first of all, certainly has increased the cost of enforcing patents but we think that increase as especially impacted are less capitalized competitors and it does resulted in less competition for our company when it comes to acquiring rights and patents. This decreased competition has more than offset the increased cost of enforcement.
We note that since the American Invents Act has been passed, we have the greatest growth in patent intake both qualitatively and quantitatively. As to the Department of Justice hearings, they were focusing on a number of issues that we think at worst only tangentially relate to our particular business."
It'll be interesting to see where it goes from here. With the volatility and unpredictability of earnings, I'm wondering if you can make money by just playing both sides with out-of-the-money options in advance of their next quarterly release. It's anyone's guess what they'll announce, and the analyst predictions are just taking a shot in the dark. Good luck longs - going to check back on this one next quarter.
The idea of volatility and unpredictability of earnings is not as much an issue going forward as it was in the past. I think you need to take management seriously here. When they say their pipeline is at unprecedented levels, that is the best guidance imaginable. The management of Acacia is top-notch and the team is superb. You can look on LinkedIn and search for Acacia and see who they are and what their resumes look like. It is very impressive indeed.
Technically, the bounce off the trend line also needs to be respected. This is a $45 stock easily and being able to pick it up at $26 yesterday was a gift from you shorts. Thank you, thank you.