market folly

Jay Petschek and Steve Major's hedge fund Corsair Capital is out with its Q4 2012 letter to investors.  In it, they provide an investment thesis write-up on one of their core picks: Acacia Research (ACTG).

Updates on Portfolio Holdings

They also provide brief updates on some of their other positions such as DigitalGlobe (DGI), which received approval for its acquisition of GeoEye.  They feel the combined entity will "yield significant revenue, expense, and capital synergies and should outperform for many years, as demand for its mapping products and services grows."  You can view Corsair's analysis of DigitalGlobe which was penned before the GEOY takeover.

Additionally, Corsair continues to like Chicago Bridge & Iron (CBI).  The hedge fund originally invested in Shaw Group, which CBI bought out.  They see CBI earning around $5.50 per share in cash earnings by 2014.

Acacia Research Thesis

This company essentially helps monetize underutilized patents and Corsair feels they fill a big gap as the majority of patents are held by small businesses or individual inventors who lack the wherewithal to protect/enforce these patents.  Corsair bought in November and think shares could trade over $40 per share, deserving a 15x multiple.

Embedded below is part of Corsair Capital's Q4 letter with their investment thesis on Acacia Research Corp:




For more hedge fund letters, we also posted up excerpts from Children's Investment Fund Q4 letter.