Aktualisiert: Mai 18
Companies with growing and value-increasing patent portfolios succeed better in the market in the long term than their competitors. There are numerous studies about this and our own research has also shown clearly in several backtests: the share-price-development of companies having valuable and growing patent portfolio values perform better than the respective reference index. In this process, those companies were filtered out of an index (e.g. DAX, Eurostoxx, S&P 500 MSCI world, etc.) whose patent portfolio values rose sustainably and which had good fundamentals. This „patent index“ was compared to the original index.
But how do these stocks perform in the event of a global crisis? The corona pandemic has caused share prices to collapse worldwide. How have the companies with valuable patents described above perform during the correction period? And how do they develop in the subsequent recovery phase? How sensitive are they to global crises?
The following chart shows an example of the (equally weighted) DJ StoxxE 600 (bottom line). The line above (blue) shows the index of the companies with the highest quality patents extracted from the StoxxE 600, also equally weighted. Here, the ratio of patent values divided by the total assets was used as a key figure. The top 20% with the highest of these "PatentLeverage" ratios were taken for the Patent Index.
The charts show the performance from July 2010 to April 2020. The framed areas mark corrections. In all corrections it can be seen that the correction in the Patent Index is more moderate and the subsequent recovery stronger. Visually, the Patent StoxxE Index graph shows a larger draw-down, but this is due to the relative performance representation. This is also the case with the last major current correction from the beginning of 2020: The red frame marks the Corona crisis from the beginning of 2020 to mid-May 2020. The section is shown enlarged below.
Although the correction is also quite large in the short term, it is generally smaller for the patent index. Following the correction, the recovery in prices is stronger than in the DJ Stoxx Europe 600 Index. The situation is different with the Stoxx 600, the equally weighted benchmark index, where the value falls to a 4-year low (in the shown equally weighted index, even to a 5-year low), as can be seen in the above chart.
Accordingly, the shares of companies in the Patent Stoxx Index generally perform better and are also more resilient to crises. This is certainly due in part to the greater confidence resulting from the innovative strength documented in patents. If the market were still aware of the enormous value of the (hidden) intangible assets created by patents, the corrections would certainly be much lower.