Brett Reiss's questions to ACACIA RESEARCH (ACTG) leadership • Q2 2025
Question
Brett Reiss of Janney Montgomery Scott asked for a deeper analysis of the risks associated with the new Bitcoin-backed loans, focusing on the maturity of hedging markets and the security of the cold storage and UCC lien process. He also questioned the cash flow resilience of the hedged energy business, the current M&A environment for private equity assets, and whether more information could be disclosed to help value the legacy patent business.
Answer
CEO MJ McNulty addressed the Bitcoin loan risks by stating the market is deep enough for effective hedging and that the collateral is highly secure, with the UCC lien embedded directly in the Bitcoin's code via a multi-signature cold storage vault. He affirmed it would be 'highly improbable' for the energy business to turn cash flow negative through 2027 due to the 70% hedge. On M&A, he noted that opportunities are emerging as the bid-ask spread closes. McNulty concluded that disclosing more on the patent business would compromise negotiating positions with counterparties.