Acacia Research Corp (ACTG), the patent licensing company that is searching for a new CEO after the resignation of Matthew Vella, may be a target or a candidate to go private because its portfolio of intellectual property is more valuable than its current enterprise value of just $40 million.

Newport Beach, Calif.-based Acacia yesterday named Marvin Key, executive vice president of Acacia Research Group, as its interim CEO while it searches for a replacement. The company said it planned to hire an executive search firm to find its new CEO.

Vella’s departure came after the licensing company on Friday said a jury invalidated the patent at issue in its Adaptix unit’s infringement action against Alcatel-Lucent and others.

Shares of Acacia are currently trading at $3.96 a share. They’ve traded between $3.82 and $18.38 over the past year and are near a five year low, reflecting the current moribund state of the patent licensing market.

"With 13 ‘marquee’ portfolios across multiple sectors, we find it interesting that ACTG’s current IP portfolio can be had for around $40M in enterprise value," said Mark Argento, an analyst at Lakestreet Capital Market, today in a note to investors in which he maintained his “buy” rating and $6.50 price target.

Argento couldn’t be reached for comment on whether he thought Acacia should put itself up for sale or was now a buyout target.

“According to ACTG’s Q3’15 investor presentation it has ~20 trials pending in 2015/16 (we estimate around 13 currently) and has filed 35 litigations in 1H’15 demonstrating a long-term pipeline of activity,” Argento said.

Acacia “has a growing pipeline of European litigation, in particular with its VoiceAge portfolio against LG and HTC in Germany."

To be sure, Acacia’s marquee portfolio strategy has not been uniformly successful. The invalidation of the patent at issue in the Adaptix infringement action against Alcatel-Lucent and others will hurt Acacia’s cases against other infringers including Ericsson.

“The good thing is that there is more to Adaptix than just one patent, the bad thing is that the loss takes some wind out of Acacia’s sail in its Adaptix monetization efforts. Trials are a coin flip at best.”

“While the Adaptix loss was a negative, we believe there is still value in the broader IP portfolio. Industry wide, time to licensing money, especially in the U.S., has been significantly extended but will correct over time. Remember this company has generated almost $120M in revenues in the last twelve months. International venues have proven rational and fruitful for both Acacia and others and will become an important part of the Acacia story going forward.”

Several licensing executives who insisted on anonymity to speak freely, said Acacia probably should put itself on the market, though such a sale might be difficult. Acacia’s substantial cash position and extensive patent portfolio should make it attractive to the right buyer, probably a financial one.

“Could someone view this as a buyout opportunity at a low price? Maybe," said Mark Gober, a director at 3LP Advisors in Silicon Valley. "You’d need a sophisticated buyer that can make a determination as to the value of the IP."

For his part, Gober said Acacia’s business model may make more sense as a private company.

“But I wonder which investment funds (if any) have the IP expertise to conduct diligence on this as a buyout opportunity. The private-equity firm Sterling Partners acquired MOSAID several years ago for $590M, so there is some precedent for PE buyouts in the IP licensing space.”

Rick Elfman, a senior managing director at Chicago-based Sterling Partners, couldn’t be reached for comment.

Acacia's Key didn't respond to an email seeking comment.

One industry veteran, who insisted on anonymity to speak freely, said “Matt’s departure is not going to put ACTG in play. Unless and until the board gets out of the way, ACTG is dead money. The board should all be leaving with Matt—all of this happened on their watch. It is a joke that they are hiring a search firm—there are a handful of people that can run ACTG and paying a search firm half a million dollars is not going to expand that list. As long as this board hangs around, ACTG’s future is very bleak.”

—To reach the reporter responsible for this story, please contact Dan Lonkevich at 707 318-7899 or at dan@thepatentinvestor.com