Acacia Research Corp.’s annual shareholder meeting next week could determine the direction the Newport Beach-based company will take after several years in choppy waters.
Activist investors Sidus Investment Management LLC and BLR Partners LP have circled June 14 on their calendars in hopes of removing Acacia’s chairman and another director up for re-election.
The New York-based hedge fund manager and Houston-based BLR Partners are two of the company’s largest shareholders, owning a combined 4.6% of outstanding Acacia shares.
Acacia (Nasdaq: ACTG) hopes to re-elect G. Louis Graziadio, who took the chairmanship in 2016, and Frank Walsh, who joined the board the same year.
Sidus and BLR want to replace them with Clifford Press and Alfred Tobia.
Press, a co-owner of New York investment advisory firm Oliver Press Partners LLC, is a director at several public companies, including Stewart Information Services Corp., Quantum Corp. and Drive Shack Inc.
Tobia, who co-founded Sidus and serves as its equity portfolio manager, is a director at San Antonio-based marketing agency Harte Hanks Inc.
Acacia and the activist investors have laid out their pitches to shareholders in recent letters.
Acacia: “Sidus Investment Management and BLR Partners have put forth two nominees with NO applicable business experience and NO plan for the Company other than a proposal that would strip Acacia of its valuable assets and destroy shareholder value.”
Activists: “Mr. Press and Mr. Tobia would bring valuable corporate governance experience and technology investing expertise—and a stockholder-driven mindset, which the board sorely needs if stockholder value is to be restored.”
Acacia: “Under Mr. Graziadio’s strong leadership, we substantially lowered our operating cost structure, terminated less attractive lawsuits, streamlined our operations and significantly reduced headcount.”
Activists: “Since [Graziadio’s] appointment as executive chairman, Acacia’s stock price has declined by approximately 41% while the Nasdaq Composite Index has appreciated by approximately 36%.”
Acacia shifted its business model under Graziadio to focus on investing in high-growth and potentially game-changing technologies in artificial intelligence, machine learning, robotics and blockchain applications, deviating from its core business of monetizing patents primarily through litigation, an increasingly costly and challenging endeavor due to recent changes in intellectual property law and jurisdiction limitations.
Acacia shares were trading around $4 as of press time, down 2% this year to a market cap of about $202 million.
Board Beef-Up
Longtime finance executive Laura Siegal was elected to the board of Santa Ana-based Iteris Inc. (Nasdaq: ITI).
The chief finance officer and a director at NEO Technology Solutions since 2013 replaces Kyle Cerminara. She hadn’t been appointed to any committees as of press time.
Chatsworth-based NEO specializes in electronics manufacturing and engineering services for the industrial, medical, aerospace and defense markets.
Iteris has expanded its business model from providing primarily transportation data to selling agricultural and weather insights. It’s playing a key role in the San Diego (I-405) Freeway widening, responsible for intelligent transportation systems and express lane infrastructure design, the traffic management plan, and signal design at 42 intersections. The $1.9 billion project stretches from the San Joaquin Hills Corridor (73) Toll Road to the 605 freeway.
Iteris posted revenue of nearly $96 million in the 12 months through March 2017, the end of its fiscal year, up 23.4% year-over-year, and an operating loss of $3.1 million compared to a loss of $3.5 million in fiscal 2016.
Billions of Prospects
Cloudvirga Inc.’s recent $50 million raise, led by Menlo Park private-equity firm Riverwood Capital, has opened more growth options for the Irvine-based startup, including acquisitions.
“We haven’t done that yet, but having a multibillion private equity partner helps,” Chief Executive Michael Schreck told the Business Journal.
Cloudvirga, which has raised more than $77 million, plans to modernize the mortgage industry through software that automates the mortgage application process.
An initial public offering could also be in the works down the road.
“It’s early for us to be thinking about that, but as we execute against our plan, it’s certainly an option,” Schreck said. “We’ll have enough scale to do that.”
The company boosted its executive ranks in November when it hired Stephen DeSantis as chief financial officer, a role he previously held at Irvine-based ShiftPixy Inc. (NasdaqCM: PIXY), which went public last year under Regulation A+ rules that allow smaller IPOs.
