Abstract Claims Description Full Text

Abstract

A portfolio selector technique is described for selecting publicly traded companies to include in a stock market portfolio. The technique is based on a technology score derived from the patent indicators of a set of technology companies with significant patent portfolios. Typical patent indicators may include citation indicators that measure the impact of patented technology on later technology, Technology Cycle Time that measures the speed of innovation of companies, and science linkage that measures leading edge tendencies of companies. Patent indicators measure the effect of quality technology on the company's future performance. The selector technique creates a scoring equation that weights each indicator such that the companies can be scored and ranked based on a combination of patent indicators. The score is then used to select the top ranked companies for inclusion in a stock portfolio. After a fixed period of time, as new patents are issued, the scores are recomputed such that the companies can be re-ranked and the portfolio adjusted to include new companies with higher scores and to eliminate companies in the current portfolio which have dropped in score. A portfolio of the top 10-25 companies using this method and a relatively simple scoring equation has been shown to greatly exceed the S&P 500 and other indexes in price gain over a ten year period.

Other References

• "Techn File: Data Mining for the Soft Assets", Invester Relations Dec. 1996
• Stobbs Gregory; "Tuning the Corporate Patent Portfolio Using the Latest Software Tools", MapiT Briefing Report, Manning & Napier, Jun. 1997
• McGuire, Craig; "The Next Level of Proprietary Protection", Wall Street & Technology, Jan99, vol. 17 Issue 1, p52, 1p
• J. S. Perko et al.; "The Transfer of Public Science to Patented Technology: A Case Study in agriculture Science", Journal of Technology Transfer, vol. 22(3) 65-72, 1997
• CHI Research, Inc. Introduces Tech-Line Analysis Tool Technology, Information Today, v 15, n 9, p 66,Oct. 1998
• Deng, Z., Lev, B., and Narin, F. "Science and Technology as Predictors of Stock Performance" (Financial Analysts Journal, vol. 55, No. 3, May/Jun. 1999, pp. 20-32)
• Rosenberg, N. and Birdzell, Jr., L.E. "Science, Technology and the Western Miracle" (Scientific American, vol. 263, No. 5, Nov. 1990, pp. 42-54)
• Griliches, Z. "Patent Statistics as Economic Indicators: A Survey" (Journal of Economic Literature, vol. XXVIII, Dec. 1990, pp. 1661-1707)
• Deng, Z., Lev, B. and Narin, F. "Science & Technology as Predictors of Stock Performance" (In Press: Financial Analysts Journal, Feb. 15, 1999, Abstract & pp. 1-26)
• Narin, F. and Noma, E. "Patents as Indicators of Corporate Technological Strength*" (Research Policy 16, 1987 pp. 143-155, North Holland)
• Trajtenberg, M. "A Penny for Your Quotes: Patent Citations and the Value of Innovations" (Rand Journal of Economics, vol. 21, No. 1, Spring 1990 pp. 172-187)
• Lev, B. and Zarowin, P. "The Boundaries of Financial Reporting and How to Extend Them" (Feb. 1998 pp. 1-51)
• Albert, M.B., Avery, D., Narin, F. and McAllister, P. "Direct Validation of Citation Counts as Indicators of Industrially Important Patents" (Research Policy 20, 1991, pp. 251-259, North Holland)
• Bronwyn, H.H., Jaffe, A. and Trajtenberg, M. "Market Value and Patent Citations: A First Look" (Apr. 1998. Paper prepared for the Conference on Intagibles and Capital Markets, New York University, May 15-16, 1998, pp. 1-34)
• Thomas, P. "The Effect of Technological Impact Upon Patent Renewal Decisions" (Technology Analysis & Strategic Management, vol. II, No. 2, 1999, pp. 181-197)
• Carpenter, M.P., Narin, F., and Woolf, P. "Citation Rates to Technologically Important Patents"(World Patent Information, vol. 3, No. 4, pp. 160-163, 1981)
• Breitzman, A., and Narin, F. "A Case for Patent Citation Analysis in Litigation" (The Law Works, Mar. 1996, vol. 3, No. 3, pp. 10-11, pp. 26-27)
• Narin, F., Hamilton, K.S. and Olivastro, D. The Increasing Linkage Between U.S. Technology and Public Science (Research Policy 26, 1997, pp. 317-330)
• Narin, F., "Tech-Line.RTM. Background Paper" (To be published in: "Measuring Strategic Competence", Version of Aug. 19, 1998, pp. 1-49)
• Coy, P. "Can You Really Beat the Market?" (Business Week, May 31, 1999, pp. 144 and 146