Marathon Patent Group Inc (NASDAQ:MARA) was founded in late 2012 and spent its first few months acquiring intellectual property (IP), especially U.S. patents. Its plan was to monetize this IP, flipping it for 2-5x its original cost. Well, its licensing and litigation efforts have succeeded at the top end of its forecast. On March 20, 2013, it commenced its first monetization campaign when its market capitalization was approximately $20 million. Since that date, the company has executed on its mission, rewarding shareholders with a 575% rally to its current market capitalization of $115 million.
- In March 2013, the company had just $3 million in cash; it now generates $24 million in annual revenue.
- In March 2013, the company owned 24 patents; today it owns 378.
- In March 2013, the company was litigating against 16 defendants; today it is litigating against 94.
- In March 2013, its shares were unlisted on the bulletin board at $0.40; today they list on the NASDAQ at $8.34.
Marathon Patent Group has been the best performing stock among all listed IP stocks since its inception. It also is litigating against some of the largest companies in the world, including the $35 billion medical company Stryker, the $55 billion electronics manufacturer Texas Instruments, and famous titans like Apple (AAPL, Financial), Amazon (AMZN, Financial), Dropbox, Google (GOOG, Financial), Mercedes-Benz, Porsche (POAHY, Financial) and Jaguar (JFC, Financial).
Marathon Patent Group's CEO started working in IP monetization in 2003 after starting his career with KPMG. His work from 2003 to 2006 at privately held FirePond generated some $100 million in revenue. By 2006, FirePond had gone public, and it was acquired in 2008.
Marathon Patent Group currently trades near its 50-day moving average of $8.34, with the smallest public float of any listed IP stock. Insider ownership is 6.3%, and short interest is very weak at 1.6%. Erich Spangenberg, one of the world's top-performing IP lawyers and personally responsible for hundreds of millions in IP monetization, is one of the company's largest shareholders. Other shareholders include Morgan Stanley (MIDZ, Financial), Jane Street Group, Royal Bank of Canada (RY, Financial) and two Vanguard funds.
Revenue growth from its most recently reported quarter grew 255% from the prior quarter. Net income totaled $0.61 per share. The company is already litigating against 94 defendants, 18 of which are scheduled to go to trial in 2015 and all of which are potential sources of licensing or litigation revenue in the next few years.
The company is also extremely lean, spending just $900,000 per quarter on operations during the last five quarters. The company's low costs result in high profits; gross margins have averaged 45-55%.
Lastly, the company benefits from a close relationship with IPNav, one of the world's most profitable IP monetization firms. Principals of IPNav are shareholders of Marathon Patent Group and provide lucrative patent acquisition opportunities from secret sources. IPNav then aids in due diligence, valuation, enforcement, litigation and licensing services. Marathon Patent Group benefits by acquiring extremely undervalued patents and then flipping them for 2-5x returns- a mission it has fully accomplished to date. Also, Marathon Patent Group's current senior VP of Licensing was previously a director at IPNav.
As you can observe, Marathon Patent Group has been the most profitable IP stock for investors this decade. With its 378 patents, 94 defendants, 18 defendants going to trial next year, and an exclusive relationship with IPNav, it has more reason to continue outperforming for the remainder of the decade. A broadly diversified company with hundreds of shots on goal, Marathon Patent Group has proven financial performance and strong operational momentum.
