Value
6.7/10data confidence 40%| Component | Sub-score |
|---|---|
| P/S | 9.2 |
| EV/EBITDA | 4.2 |
ACTG · Why this verdict
Why Acacia Research (ACTG) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score6.4/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Acacia Research has cleared the asymmetry gate with an improving earnings trend, but quality sits well below the exit threshold, momentum has failed its gate, and a small-cap sizing cap keeps the position at avoid.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The quality score of 1.7 sits well below the 4.0 floor cited as grounds to exit the position, with every core profitability component — return on equity, return on assets, gross margin, operating margin, and net margin — reading zero. Quality breakdown | At least some core profitability components should move off zero and the quality score should climb toward the 4.0 floor over the next 12 months for the exit signal to reverse. | ↑Improving |
| CounterThe current ratio component reads a solid 5.0, suggesting near-term liquidity is not itself a pressing concern even with weak profitability. | ||
The setup failed the momentum gate at 3.1 against a 4.5 threshold, with volume notes describing distribution (falling on-balance volume) even as price holds above its 200-day moving average. Engine gate (failed) | The momentum score should recover back above the 4.5 gate threshold over the next 12 months for the failed-momentum concern to clear. | ↑Improving |
| CounterThe asymmetry gate passed comfortably at a reward-to-risk ratio of 2.3, and technical notes show maximum readings on both the Bollinger and support/resistance components, suggesting the chart setup is not uniformly weak. | ||
The trailing four-quarter record opens with an in-line result, then runs three consecutive beats, most recently by 22.22%, driving the average surprise up to 54.1%. Earnings | The beat streak should extend into the next reported quarter, due in 32 days, for the improving earnings trend to be considered intact. | ↓Deteriorating |
| CounterTwo of the three beats were driven by unusually large surprises above 90%, a pace that may not be repeatable and could mean-revert toward smaller surprises or a miss. | ||
Despite the passed asymmetry gate and a 32% analyst-target upside, position sizing is capped at avoid because the roughly $0.4 billion market cap sits below the threshold used for institutional reach. Edge rationale | Market capitalization should grow well beyond the current small-cap level over the next 12 months for the sizing constraint to lift. | ↑Improving |
| CounterThe strong earnings beat streak and favorable reward-to-risk ratio suggest fundamental improvement that could eventually support a larger market cap. | ||
Risk components show leverage at a debt-to-equity reading of 9.3 and beta pinned at the maximum reading of 10, indicating both high leverage and high sensitivity to market swings. Components | The debt-to-equity and beta components should decline from their current elevated readings over the next 12 months if the risk profile is improving. | ↓Deteriorating |
| CounterShort interest reads a moderate 7.3 on the risk-component scale with a low days-to-cover of 1.4, suggesting bearish positioning against the stock could unwind quickly if sentiment shifts. | ||
The quality score of 1.7 sits well below the 4.0 floor cited as grounds to exit the position, with every core profitability component — return on equity, return on assets, gross margin, operating margin, and net margin — reading zero.
↑ImprovingQuality breakdown
- Expectation
- At least some core profitability components should move off zero and the quality score should climb toward the 4.0 floor over the next 12 months for the exit signal to reverse.
CounterThe current ratio component reads a solid 5.0, suggesting near-term liquidity is not itself a pressing concern even with weak profitability.
The setup failed the momentum gate at 3.1 against a 4.5 threshold, with volume notes describing distribution (falling on-balance volume) even as price holds above its 200-day moving average.
↑ImprovingEngine gate (failed)
- Expectation
- The momentum score should recover back above the 4.5 gate threshold over the next 12 months for the failed-momentum concern to clear.
CounterThe asymmetry gate passed comfortably at a reward-to-risk ratio of 2.3, and technical notes show maximum readings on both the Bollinger and support/resistance components, suggesting the chart setup is not uniformly weak.
The trailing four-quarter record opens with an in-line result, then runs three consecutive beats, most recently by 22.22%, driving the average surprise up to 54.1%.
↓DeterioratingEarnings
- Expectation
- The beat streak should extend into the next reported quarter, due in 32 days, for the improving earnings trend to be considered intact.
CounterTwo of the three beats were driven by unusually large surprises above 90%, a pace that may not be repeatable and could mean-revert toward smaller surprises or a miss.
Despite the passed asymmetry gate and a 32% analyst-target upside, position sizing is capped at avoid because the roughly $0.4 billion market cap sits below the threshold used for institutional reach.
↑ImprovingEdge rationale
- Expectation
- Market capitalization should grow well beyond the current small-cap level over the next 12 months for the sizing constraint to lift.
CounterThe strong earnings beat streak and favorable reward-to-risk ratio suggest fundamental improvement that could eventually support a larger market cap.
Risk components show leverage at a debt-to-equity reading of 9.3 and beta pinned at the maximum reading of 10, indicating both high leverage and high sensitivity to market swings.
↓DeterioratingComponents
- Expectation
- The debt-to-equity and beta components should decline from their current elevated readings over the next 12 months if the risk profile is improving.
CounterShort interest reads a moderate 7.3 on the risk-component scale with a low days-to-cover of 1.4, suggesting bearish positioning against the stock could unwind quickly if sentiment shifts.
Per-dimension breakdown
Quality
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 0.0 |
| Gross margin | 0.4 |
| Op margin | 3.0 |
| Net margin | 0.0 |
| Current ratio | 8.2 |
| Moat | 5.8 |
| Piotroski F | 5.6 |
- ▸Quality concerns
Growth
10.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 10.0 |
- ▸Strong growth: 124% YoY
Momentum
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 7.1 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 4.5 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 7.0 |
| Analyst rating | 5.9 |
| Price target | 8.1 |
- ▸LLM news sentiment: +0.40 (n=1)
- ▸Light analyst coverage (1.0) — signal dampened
- ▸Analyst upside: 24%
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
6.3/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.1 |
| quality rank | 1.2 |
| growth rank | 9.6 |
- ▸Industry growth leader
- ▸Conservative debt levels
Technical
4.0/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 2.7 |
| 52w position | 8.3 |
| gap | 5.0 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.6 |
| days to cover | 4.5 |
| volatility | 2.7 |
| put call | 6.7 |
| implied vol | 3.3 |
| beta | 10.0 |
| debt equity | 9.3 |
- ▸High IV: 60%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 5.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (7)
- MOMENTUM:5.3>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:86d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.6<1.5@spot
Warning (1)
- MOMENTUM:5.3<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
0.62
Upside
+5.8%
Downside
9.3%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 64, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $0.5B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's 0.6<1.5@spot outcome against Growth at 10.0 and asymmetric R:R of 0.62.
The strongest dimensions are Growth at 10.0, Insider at 7.3, and Catalyst at 7.0; the weakest are Quality at 2.9, Technical at 4.0, and Momentum at 5.3. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 0.62 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Quality Below Floor Exit Signal
Trip ifQuality score rises above 4.0 from the current 1.7.
- P2Momentum Gate Failed
Trip ifMomentum score rises above 4.5 from the current 3.1.
- P3Earnings Beat Streak After Inline Start
Trip ifEarnings surprise falls below 0% (a miss) in the next reported quarter.
- P4Institutional Reach Caps Sizing
Trip ifMarket capitalization exceeds $0.8 billion, double the currently cited $0.4 billion level.
- P5Elevated Leverage And Beta Risk
Trip ifDebt-to-equity risk component falls below 5.0 from the current 9.3.