ACTG

Acacia Research ($ACTG) CEO Buys Shares Following 411% Revenue Surge and Stock Rebound

05/21/2025 20:40

Acacia Research Corporation ($ACTG) CEO Martin Mcnulty Jr. has purchased 5,300 shares at an average price of $3.77 per share on May 19, 2025. This $19,981 transaction comes at a pivotal moment, following a stock rebound after the company's impressive first-quarter earnings announcement. The CEO's purchase occurred just two weeks after Acacia reported first-quarter 2025 results that significantly exceeded market expectations. On May 8, the company posted adjusted earnings of $0.25 per share, a stark contrast to the analysts' projected loss of $0.06 per share. Revenue surged an extraordinary 411.6% year-over-year to $124.42 million, vastly outperforming the expected $55 million. This remarkable performance improvement was largely driven by the company's Intellectual Property operations segment, which generated $69.9 million in revenue and $43.3 million in adjusted EBITDA during the quarter. This success primarily stemmed from WiFi-6 portfolio licensing fees, demonstrating the fruition of the company's IP strategy. The company has also maintained stable performance across its diverse business segments, including Energy operations ($18.3 million revenue), Manufacturing operations ($28.5 million revenue), and Industrial operations ($7.7 million revenue). Notably, the Energy segment recorded its largest quarterly revenue under Acacia ownership, while the Manufacturing segment showed its first full quarter contribution following the Deflecto acquisition. Despite these positive developments, $ACTG's stock has been under significant pressure in recent months. Trading around $4.35 at the beginning of 2025, the stock experienced a substantial decline in mid-March, falling below $3.00 by late April. Particularly notable was a 14.5% single-day plunge from $4.22 to $3.61 on March 13, coinciding with the company's Q4 2024 earnings release, which reported an adjusted loss of $0.14 per share compared to earnings of $0.62 in the prior year. However, following the strong Q1 results announcement on May 8, the stock began to recover, surging 22.8% from $3.07 to $3.77 on May 9 alone. The CEO's share purchase immediately following this rebound signals strong management confidence in the company's value and growth potential. This move contrasts with the November 2024 sale by director Isaac T. Kohlberg, who divested 15,000 shares at $4.57 per share (approximately $68,572). The CEO's decision to buy at a lower price than last year's selling point may reflect management's view that the stock is currently undervalued. Acacia Research maintains robust financial health with approximately $338.2 million in cash and cash equivalents (about $3.52 per share), representing a substantial portion of its current market capitalization of roughly $363.5 million. Notably, the parent company carries zero debt, with all indebtedness ($108.4 million) being non-recourse debt attributed to subsidiaries Benchmark and Deflecto. This strong financial position and diversified business model may provide the company with competitive advantages in the current uncertain economic environment. Since early 2025 through May, U.S. markets have experienced significant volatility driven by trade tensions, fiscal concerns, and credit rating downgrades. Analysts currently maintain a 'buy' rating on Acacia Research with a 12-month price target of $6.00, suggesting approximately 57% upside potential from current trading levels. CEO Martin Mcnulty Jr.'s share purchase reinforces this positive outlook, demonstrating management's confidence in the company's trajectory. The company is expected to report its Q2 2025 results in early August, and investors will be watching closely to see if the strong Q1 performance is sustainable. Particular attention will be paid to the continuity of intellectual property licensing revenues and the integration progress of the recently acquired Deflecto business.

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