Appeal No. 2005-1674
Application 09/613,153
The specification, after explaining that companies which announced stock buybacks have
outperformed the market by a margin of up to 9% in the four years after the initial repurchase
announcement, col. 1, ll. 18-24, and noting that there is conflicting literature as to whether
companies which actually had repurchased their stock outperformed others in the market, col. 1,
ll. 34-37, explains that the price/sales ratio has been the best single factor for predicting company
performance:
To develop successful investment strategies, financial advisers
currently rely on a myriad of theories and factors in an attempt to find the
best investment vehicles for their clients. These theories are often based
on age-old economic trends or newly developed calculations and stock
screening techniques. One such recognized value factor for predicting or
analyzing company performance is the price/sales ratio. The price/sales
ratio is the relationship of a company's stock price to its annual sales (or
revenues) per share. In the book, What Works on Wall Street, by J. P.
O'Shanunnasey (1996), the author showed that the 50 stocks with the
lowest price/sales ratio out performed the market by an average of 4.27
percentage points from Dec. 31, 1952 to Dec. 31, 1994. This level of
outperformance was greater than the difference produced by any single
variable.
Col. 1, ll. 38-53. According to the specification, "[t]here is, however, no single method that
combines the performance of the price/sales ratio with the buyback theory to maximize the
performance of a stock investment portfolio," col. 1, ll. 54-57 (emphasis added), and thus "there
exists a need for an investment strategy that automatically determines those companies buying
back the greatest percentage of their stock while maintaining the lowest price/sales ratio." Col.
1, ll. 61-64 (emphasis added). However, the "Summary of the Invention" and the "Detailed
which was requested by the panel at oral argument.
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