Real-World & Alternative DataExtended setlive in productionNew

Patent Innovation Premium

Updated quarterlyData needs: mediumlong only

2008

Kogan, Papanikolaou, Seru & Stoffman 2017, QJE (extended to 2024)

In plain terms

Markets under-react when companies are granted high-value patents (measured by 3-day stock reaction at grant). Firms with valuable recent patents outperform by 3-5%/yr.

How it works

Patent values inferred from 3-day stock reaction to USPTO grant. Firms with high value of recently granted patents (relative to market cap) outperform by ~3-5%/yr — real options on growth the market under-prices until citations validate.

Live results

40 times picked on its own · 362 times inside a blend (336 beat the stock) · updated 2026-06-06

This strategy is a frequent ingredient in blends that combine a few strategies on one stock. It has contributed to 362 such blended picks (336 of which beat simply holding the stock). Picking it on its own is only one of the ways it shows up.

How its picks scored vs. buy & hold

Each pick is graded on a recent year it was never tuned on, against simply owning the same stock

Where its edge concentrates

Share of picks in each company-size group that beat buy & hold

How often it trades

Active vs. patient. Bars on the left mean it waits for rare setups; bars on the right mean it trades often

Return vs. buy & hold

How much each pick beat or trailed simply owning the stock over the test year (extreme microcap moves trimmed)

Loading substrate evidence…

Data dependencies

Uspto patentsview (free bulk)
USPTO grant data with citation counts.
Kpss extended csv
A data feed this strategy reads, refreshed on its normal schedule.

Expected edge

Reported return: 3-5% ann. L/S (KPSS 2017 QJE)
Tested over: 1926-2010

3-5% ann. long-short; survives most replication tests

Example tickers where this is likely to fire

NVDA QCOM TSM

Illustrative only, the signal fires based on the live data, not a fixed list.

Related families

Gross ProfitabilityPrice & Market Behavior

Companies with high gross profit / total assets keep beating peers — it's the cleanest measure of 'is this business actually good'.

R&D-Intensity ValuePrice & Market Behavior

Standard value factors mistake R&D-heavy tech firms as 'growth' because R&D is expensed not capitalized. Adding R&D back uncovers hidden value.

Explore Patent Innovation Premium on alphactor.ai

See which tickers this family is currently firing on, with live signals and rankings.

Open universe with this filter →Browse all 571 families