Guru Richard Snow (Trades, Portfolio) is the founder, president and CIO of Snow Capital. Snow has over 30 years of experience as a research analyst and portfolio manager. His investment experience dates back to 1980 when he formed R.A.S Capital management, managing private family assets.
In the third quarter of 2015, Snow added 329,754 shares of Acacia Research Corp. (ACTG, Financial)
Acacia Research is the industry leader in patent licensing. The company partners with patent owners and applies its deep legal and technology expertise to patent assets to unlock financial value. Acacia has generated over $1.2 billion in revenue since their inception in 1993. They have returned more than $695 million to their patent partners and currently own or control the rights to over 200 patent portfolios globally.
Acacia Research has a market cap of $189.76 million, an enterprise value of $41.47 million, a P/B ratio of 0.48, a quick ratio of 7.01 and a dividend yield of 13.38%.
According to GuruFocus, Acacia Research has a good financial strength rating of 7/10 with no debt and a 0.92 equity to asset ratio, which is higher than 96% of the 722 companies in the global business services industry. Their dividend yield is also close to a three-year high, the price is close to a three-year low and the P/B ratio is also close to a 10-year low. The company is also trading well below its intrinsic value and the book value has been growing at an average rate of 14% over the past 10 years.
The company appears to be a great investment; however, there are still a few warning signs with Acacia Research according to GuruFocus. The company's operating margin is -46.12%, which is ranked lower than 93% of the 732 companies in the Global Business Services industry. The company's per share revenue has also been on the decline over the past three years, which is not a good sign, but three years is too small a sample size to base any serious judgement.
Below is a Peter Lynch chart for Acacia Research.
I believe Acacia Research is a profitable purchase becasue it has a differentiation advantage over companies in their industry with 23 years of experience in patent licensing. The company has a strong financial rating, and they’re paying a healthy dividend yield. The company is also trading at a three-year price low and below its intrinsic value.
Disclaimer: Author does not currently own any shares of this stock.
Cheers to your investment success.
