One can invest successfully in patents and intellectual property by identifying emerging technology trends, then finding the companies that hold core intellectual property (IP) rights associated with these growing markets. As an alternative, though, one could invest in companies that do this for you. Below, I will look at four companies in the patent industry to watch closely.
Boom or bust
Shares of Vringo, Inc. (NASDAQ:VRNG) have averaged around its current price of $3.10. This is primarily because there has been little movement recently in terms of increasing its patent portfolio.
Slow and steady
Unlike Vringo, Inc. (NASDAQ:VRNG), Acacia Research Corp (NASDAQ:ACTG) uses a model of steady accumulation of patent portfolios spread across multiple industries. Acacia Research Corp (NASDAQ:ACTG) develops, licenses and acquires technology patents. Acacia Research Corp (NASDAQ:ACTG) stock is currently hovering around $22 and has a forward price-to-earnings ratio of 9.48.
Acacia Research Corp (NASDAQ:ACTG) recently reported adjusted earnings of $0.13 per share, a decrease of 69%, compared to $0.43 in the same quarter in 2012. Revenue dived 54.24% to $23.1 million from the same quarter in 2012. Wall Street had expected revenue of $66.98 million on earnings of $0.47 per share. A big reason for the missed expectations was the near doubling of litigation and licensing expenses to $9.9 million. According to Reuters, this stemmed from an increase in prosecution and enforcement costs, and an increase in third-party consulting fees related to new licensing and enforcement programs. Acacia Research Corp (NASDAQ:ACTG) took over seven new patent portfolios in the automotive, technology and energy sectors during the second quarter.
Regardless of the movement we see in the next few weeks, the company’s stable business model makes it a good long-term buy.
A big newsmaker
Another company that uses a similar strategy of steady accumulation of patent portfolios across multiple industries is Spherix Inc (NASDAQ:SPEX). Spherix Inc (NASDAQ:SPEX) recently announced an agreement to acquire 222 patents from North South Holdings that covers a wide range of growing industries. The Harris portfolio also has applicability in law enforcement communications, military and homeland security – in other words, where the money is at. Government spending in these categories is astronomical, followed closely by consumer spending in the mobile and telecommunications sector which, coincidentally, the company has signed a letter of intent with patent owners to acquire next quarter.