MISSION INTANGIBLE

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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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All We Know Are the Facts, Ma'am

C. HUYGENS - Saturday, April 19, 2014
Sgt Joe Friday only knew facts. The rest of us have to ferret them out from all the spin. Fortunately, we are not alone. As further evidence that one of the causes of 21st century reputation risk is that anyone with a keyboard and access to the internet can be an investigative journalist, there are at least 59 organizations that "purport to check facts cited by politicians and news outlets that quote them."

The 16th US President once quipped, "You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time." These 59 groups are determined to use facts to reduce the frequency of the first two scenarios.

Read more.

Speaking of substance and spin, if managing reputation risk is on your mind, read this helpful recent "how-to" article from Risk Management magazine.

RepuStars 2014 April 18

C. HUYGENS - Friday, April 18, 2014

Weekly Reputation Index Metrics


At the close of trading April 18, 2014, REPUVART and REPUVAR stood at 3597.62 and 2999.69 respectively. Over the past four weeks, the former has changed by 1.14%, while the latter has changed by 0.93%. The benchmark S&P500 Composite Index stood at 1624.32 (31 Dec 2001=1000) and has changed over the past four weeks by -0.09%. The current calendar year spread between REPUVAR and the S&P500 is -2.55%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 13.20% and 10.57% respectively; the S&P500 Composite Index has changed by 20.97%. The trailing 12-month spread between REPUVAR and the S&P500 is -10.40%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 34.52% and 27.61% respectively; the S&P 500 Composite Index has changed by 42.07%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 2.87%, 23.98%, and 84.69% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 3.02%.

The spreads between the S&P500-only index informed by reputation metrics, REPUSPX, and the broad market index informed by reputation metrics, REPUVAR, for the calendar year and for the trailing twelve months respectively are 0.82% and 13.41%.

Other interval changes in the magnitude of the indices are shown in the tables and charts below.

Analysis

The RepuStars family of algorithmically-driven equity portfolios all share one central hypothesis: the economically-relevant collective behaviors of the vast majority of stakeholders is a superior forecast of future value than the short-term economic behavior of equity investors.

Larry Fink, CEO of Blackrock, said as much in the Financial Times this week. “The rout in technology shares and gyrations in emerging markets have been driven by hedge funds rather than long-term investors,” the newspaper reported. “Mr Fink said technology stocks had borne the brunt of the selling because of their high valuations and oversize positions in the sector of a small number of hedge funds, neither of which would give a guide to the future performance of the shares.”

After a few weeks in Q2, the greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Rite Aid (RAD), which holds onto first place with returns of 28.09%. Weatherford International (WFT) returns to second with 24.13%, and back in the top three is Cavium (CAVM) with returns of 19.82%. These are three of the 41 firms identified by the RepuStars Variety algorithm at the start of 2014 as value opportunities.

As for those whose reputational value may have been overestimated, Pharmacyclics (PCYC) is in the cellar with returns of -33.61, Rent-A-Center Rent-A-Center (RCII) slips lower with with -17.96% for the year, and Mobile TeleSystems OJSC (MBT) is at -14.03%.

Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Garmin (GRMN) at 20.38%, Entergy Corp (ETR) at 16.10% and Pepco (POM) at 14.12%.

Side Note: A description of the portfolio constituents and historical returns data from December 31, 2001 can be obtained on request from Technology Option Capital, its manager. Click Here.

Background

The RepuStars® Variety Corporate Reputation Index calculated by S&P/Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re Reputational Value Metrics. The metrics comprise non-financial indicators of reputational value (RVM) and ranking (CRR). These are the same metrics that power the reputation controls provided by Consensiv, and the league table of reputational value, the Consensiv 50,  published periodically, and most recently January 1, 2014, by CFO.com.

The RepuStars Variety Corporate Reputation Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click on the ticker names for real time quotes.

The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to  Steel City Re’s proprietary Reputational Value Metrics™, which track 7400 companies weekly. The principles behind measuring reputational value are described in the book, Reputation, Stock Price, and You: Why the market rewards some companies and punishes others (2012, Apress).

The RepuStars indices are reconstituted annually in the first week of January and posted by S&P/Dow Jones Indexes in the third week. The Indices were last reconstituted 18 Jan 2014.

REPUSPX  is a pocket index with portfolio constituents being selected algorithmically by the same criteria as the constituents for REPUVAR and REPUVART, except that the field of eligible companies is limited to constituents of the S&P500 composite equity index.

The strategy used to pick the constituent members of REPUSPX, REPUVAR and REPUVART is discussed in the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (Apress, 2012). (Link below)

Reputation, Risk and Finance

Reputation management through superior control of a company's intangible assets may be one of the best paths to value creation today. If it is not on your agenda, perhaps it should be. Here are several things you can do right now to start creating value for your organization:

1. Become better informed. Participate in our regular Mission Intangible Monthly Briefings held on the second Friday of every month, read the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (2012)  or its predecessor, Mission: Intangible. Managing risk and reputation to create enterprise value (2010), available at the IAFS Store, specialty finance sector retailers, or other leading online book retailers
2. Become a member of the Intangible Asset Finance Society and engage.
3. Join our community on Linked-In and stay in the information flow.

Notices

S&P Dow Jones Indices is a registered trademark of S&P Dow Jones Indices LLC, a part of McGraw Hill Financial; RepuStars and Steel City Re” are registered trademarks of C. Huygens & Co. LLC. The method underpinning the RepuStars Variety indexes is subject to a pending patent assigned to C. Huygens & Co. LLC. S&P McGraw Hill Financial and its affiliate (S&P Dow Jones Indices) makes no representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and McGraw Hill Financial shall have no liability for any errors, omissions, or interruptions of any index or the data included therein. Past performance of an index is not an indication of future results. All information provided by S&P Dow Jones Indices is general in nature and not tailored to the needs of any person, entity or group of persons. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties. It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments offered by third parties that are based on that index. S&P Dow Jones Indices does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that seeks to provide an investment return based on the performance of any Index. Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC, or their respective affiliates and none of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC and their respective affiliates make any representation regarding the advisability of investing in such products. Inclusion of a company in any of the indexes in this piece does not in any way reflect an opinion of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC or any of their respective affiliates on the investment merits of such company. None of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC or any of their respective affiliates is providing investment advice in connection with these indexes.

Brand v. Reputation: GM edition

C. HUYGENS - Thursday, April 17, 2014
An operational failure in business process controls or supply chain integrity management can help sharpen the difference between the value of a reputation, and the value of a brand. For a company like GM being roiled by evidence of longstanding failures in governance, controls and risk management, the difference implies two very different future courses.

Jonathan Salem Baskin, Managing Director of the reputation controls company, Consensiv, explains:

If corporate reputational value were nothing more than immediate public opinion — like brand awareness — then the company could rely on consumers’ ability, if not overt desire, to forget the past and literally “buy” the company’s latest sales pitch. But reputation is an asset based in operational reality, not the minds of consumers, and GM faces a long list of stakeholder expectations, and resulting valuations, that won’t be easily erased or forgotten. From processes to supply chain relationships, analysis and reporting thresholds, to all of the substance of its relationships with its various communities have been called into question by the ignition crisis, and those stakeholders are and will make future decisions based on it.

Read more.

Duke Energy: Directors personally responsible for coal ash disaster

C. HUYGENS - Tuesday, April 15, 2014
Less than 90 days after of the nation's worst coal ash spills, four Duke Energy (DUK) directors are being held personally responsible for the disaster by two large activist pension funds. An operational failure led to failure in one of the six key processes that govern reputational value: sustainabilty. More interesting than merely affirming, yet again, that a corporate reputational crisis is always personal to a corporate director, the concerted action by these two pension funds represents an entirely new strategy. It appears these two funds are trying to preserve enterprise value and mitigate a reputational crisis by naming and removing individual directors promptly.

Reuters reports today that "The California Public Employees' Retirement System and New York City Pension Funds have written to shareholders of Duke Energy Corp, urging them to vote against the re-election of four directors. "The financial, legal, regulatory and reputational risks for Duke Energy are serious and mounting," Calpers corporate governance director Anne Simpson and New York City comptroller Scott Stringer wrote in their open letter. according to the Financial Times. The funds blamed Duke Energy directors Alex Bernhardt, James Hyler, James Rhodes and Carlos Saladrigas for the 39,000 ton coal ash spill in North Carolina's Dan river in February, after a stormwater pipe broke under a 27-acre ash pond at the company's coal plant."

The February 2 spill, according to the activist organization, Southeast Coal Ash, began when "a stormwater pipe burst beneath a coal ash impoundment at Duke Energy’s retired Dan River Power Station near Eden, North Carolina." Duke Energy estimates 30,000-39,000 tons and 24 million gallons of wastewater, or about 140,000 tons of toxic waste, entered the Dan River.



The reputational value metrics profile of Duke Energy is instructive. The company is, and has been a top performer in its peer group of 131 electric utilities, coming in this week with a Reputation Premium at the 98th percentile. Befitting a company with a superior reputation (read, high expectations among stakeholders), Duke Energy struck a conciliatory tone, admitting the spill at its Dan River plant shouldn't have happened. "Duke Energy takes full responsibility for this accident. We'll be taking a fresh look at all of our ash basins and how we handle that after we fix this pipe," Duke Energy spokesman Tom Williams told WSOC TV.

The Consensus Trend, an indicator of stakeholder uncertainty, started rising after the spill taking Duke Energy up from below the first quartile to the median. By any objective measure of reputational value, this is discomfort, but certainly not a crisis.

In what should be viewed as a possible sea change, activist investors are now getting ahead of the "usual pile on of litigators, regulators and mommy bloggers. " They are going directly after the board -- not to extract monetary compensation -- but to preserve enterprise the company's reputational health and top drawer reputational value by shaking up what the funds believe constitutes a failure in governance, control and risk management. The are demanding individual board members be held culpable -- very personal, indeed.

RepuStars 2014 April 11

C. HUYGENS - Saturday, April 12, 2014

Weekly Reputation Index Metrics


At the close of trading April 11, 2014, REPUVART and REPUVAR stood at 3544.57 and 2959.00 respectively. Over the past four weeks, the former has changed by 0.87%, while the latter has changed by 0.79%. The benchmark S&P500 Composite Index stood at 1581.50 (31 Dec 2001=1000) and has changed over the past four weeks by -1.38%. The current calendar year spread between REPUVAR and the S&P500 is -1.21%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 7.56% and 5.19% respectively; the S&P500 Composite Index has changed by 13.95%. The trailing 12-month spread between REPUVAR and the S&P500 is -8.76%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 33.01% and 26.32% respectively; the S&P 500 Composite Index has changed by 38.16%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 1.38%, 20.07%, and 81.02% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 6.12%.

The spreads between the S&P500-only index informed by reputation metrics, REPUSPX, and the broad market index informed by reputation metrics, REPUVAR, for the calendar year and for the trailing twelve months respectively are 0.66% and 14.88%.

Other interval changes in the magnitude of the indices are shown in the tables and charts below.

Analysis

Expectations drive behavior. The current equity market downturn is being driven by expectations that the equity market downturn with continue. That’s “reputation,” in a nutshell

From the Financial Times, “When momentum turns, it turns hard and it’s unclear when people will step in and support them,” said George Pearkes, an analyst at Bespoke Investment Group.”

And now the same, also from the Financial Times, in finance double speak. “Cracks have formed in high growth, strong momentum and high priced stocks,” noted the research from Goldman Sachs. “The performance of those parts of the market has damaged hedge fund performance and led to de-risking that could threaten markets at the index level if it spreads beyond what, up until now, have been fairly narrow borders. Biotech, small-cap, information technology and internet retail shares have been notable laggards.”

The rising tide that has floated all ships is slowly receding. More rational expectations will prevail.

After one quarter, the greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Rite Aid (RAD), which leaps first place with returns of 25.94%. BRF SA (BRFS) moves up to second place with returns of 18.65% year to date. Veolia Environment (VE) slips to third with returns, unchanged from last week, of 18.00%. These are three of the 41 firms identified by the RepuStars Variety algorithm at the start of 2014 as value opportunities.

As for those whose reputational value may have been overestimated, Pharmacyclics (PCYC) is in the cellar with returns of -36.3, Rent-A-Center Mobile Telesystems (MBT) moves down with returns of -17.04%, and (RCII) holds with -16.55% for the year.

Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Garmin (GRMN) at 17.57%, Entergy Corp (ETR) at 14.61% and Ameren (AEE) at 11.97%.

Side Note: A description of the portfolio constituents and historical returns data from December 31, 2001 can be obtained on request from Technology Option Capital, its manager. Click Here.

Background

The RepuStars® Variety Corporate Reputation Index calculated by S&P/Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re Reputational Value Metrics. The metrics comprise non-financial indicators of reputational value (RVM) and ranking (CRR). These are the same metrics that power the reputation controls provided by Consensiv, and the league table of reputational value, the Consensiv 50,  published periodically, and most recently January 1, 2014, by CFO.com.

The RepuStars Variety Corporate Reputation Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click on the ticker names for real time quotes.

The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to  Steel City Re’s proprietary Reputational Value Metrics™, which track 7400 companies weekly. The principles behind measuring reputational value are described in the book, Reputation, Stock Price, and You: Why the market rewards some companies and punishes others (2012, Apress).

The RepuStars indices are reconstituted annually in the first week of January and posted by S&P/Dow Jones Indexes in the third week. The Indices were last reconstituted 18 Jan 2014.

REPUSPX  is a pocket index with portfolio constituents being selected algorithmically by the same criteria as the constituents for REPUVAR and REPUVART, except that the field of eligible companies is limited to constituents of the S&P500 composite equity index.

The strategy used to pick the constituent members of REPUSPX, REPUVAR and REPUVART is discussed in the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (Apress, 2012). (Link below)

Reputation, Risk and Finance

Reputation management through superior control of a company's intangible assets may be one of the best paths to value creation today. If it is not on your agenda, perhaps it should be. Here are several things you can do right now to start creating value for your organization:

1. Become better informed. Participate in our regular Mission Intangible Monthly Briefings held on the second Friday of every month, read the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (2012)  or its predecessor, Mission: Intangible. Managing risk and reputation to create enterprise value (2010), available at the IAFS Store, specialty finance sector retailers, or other leading online book retailers
2. Become a member of the Intangible Asset Finance Society and engage.
3. Join our community on Linked-In and stay in the information flow.

Notices

S&P Dow Jones Indices is a registered trademark of S&P Dow Jones Indices LLC, a part of McGraw Hill Financial; RepuStars and Steel City Re” are registered trademarks of C. Huygens & Co. LLC. The method underpinning the RepuStars Variety indexes is subject to a pending patent assigned to C. Huygens & Co. LLC. S&P McGraw Hill Financial and its affiliate (S&P Dow Jones Indices) makes no representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and McGraw Hill Financial shall have no liability for any errors, omissions, or interruptions of any index or the data included therein. Past performance of an index is not an indication of future results. All information provided by S&P Dow Jones Indices is general in nature and not tailored to the needs of any person, entity or group of persons. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties. It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments offered by third parties that are based on that index. S&P Dow Jones Indices does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that seeks to provide an investment return based on the performance of any Index. Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC, or their respective affiliates and none of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC and their respective affiliates make any representation regarding the advisability of investing in such products. Inclusion of a company in any of the indexes in this piece does not in any way reflect an opinion of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC or any of their respective affiliates on the investment merits of such company. None of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC or any of their respective affiliates is providing investment advice in connection with these indexes.

Novartis: Doctoring data

C. HUYGENS - Friday, April 11, 2014
For a company, a reputational crisis is the threat that stakeholders will fundamentally change their expectations. A crisis is often precipitated by the disclosure of what amounts to failures in controls in the areas of ethics, innovation, quality, safety, sustainability, and security. In this sense, as exemplified currently by Novartis in Japan, adverse media and the public relations noise that follows provide a window into the operational failure in ethical controls and falsified clinical trial records.

Read more.

Bitcoin: The ultimate intangible asset - 18 Apr 10h00 EST Mission Intangible Monthly Briefing

C. HUYGENS - Wednesday, April 09, 2014

Briefing Friday 18 April at 10h00 ET

Program: Bitcoin: The Ultimate Intangible Asset


As described by CNN's Money, "Bitcoin is a new currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks!" Is this a net benefit?

Tyler Winklevoss, one of the victim/villians at the founding of Facebook as portrayed in the movie, Social Network, and a Bitcoin enthusiast explains, “… it’s a transaction free, borderless global payments system…its intrinsic value is that it takes all those costs out of the legacy system we’ve known for so long.” Free is the upside of anarchy. The FBI has raised concerns about the use of virtual currencies in illegal marketplaces. A major Bitcoin exchange, Mt.Gox, collapsed after it was (virtually) robbed. And the IRS is treating the virtual currency as a taxable property.

Joining the program to explore this intangible asset/currency are Vance Crowe, Founder, Articulate Ventures; and Paul Liebman, Chief Compliance Officer, University of Texas, and also a member of the Society's Reputation Leadership Council. Jonathan Salem Baskin,  Managing Director of Consensiv, moderates. Learn more.

Screw Up, Cough Up

C. HUYGENS - Monday, April 07, 2014
When the big banks screwed up, taxpayers felt the pain. Much was made of the observation that those who could, or should, have seen the disaster coming were financially rewarded in the interregnum. There is no monopoly of socializing risk. The New York Times observed over the weekend that "While shareholders of G.M. will shoulder the costs of fines, settlements and the loss of trust arising from the mess, the executives responsible for monitoring internal risks like these are unlikely to be held to account by returning past pay."

The word is clawback. Two years ago, as the crisis of the London Whale was engulfing JPMorgan Chase, Bloomberg reported "that “New York City Comptroller John Liu said that JPMorgan should tell shareholders it will ‘aggressively claw back every single dollar possible from the executives responsible for the $2 billion loss.’” Huygens observed that employees subject to the clawback would probably have other opinions.

Fast forward, and it is deja vu all over again-but different. In additional to financial shenannigans, Scott M. Stringer, the current New York City comptroller, who oversees five municipal employee pension funds with assets of $140 billion, has successfully negotiated expanded thresholds for clawbacks at five companies this year including both banks and non-banks: Allergan, Halliburton, Northrop Grumman, PNC Financial and United Technologies.

According to the New York Times, "Under the agreements, pay can be retrieved from a wider array of senior executives than is typical. And recoveries can be sought not only for intentional misconduct and gross negligence, but also for violations of law or company policies that cause significant financial or reputational harm to the institution." Failures in governance, controls, and risk management are actionable causes.

Huygens has often suggested that reputational value metrics, such as those published by Consensiv,  could be useful tools for managing reputation. The New York City comptrollers have identified another application: measuring loss to trigger punishment.

Read more.

RepuStars 2014 April 4

C. HUYGENS - Saturday, April 05, 2014

Weekly Reputation Index Metrics


At the close of trading April 4, 2014, REPUVART and REPUVAR stood at 3582.18 and 2991.11 respectively. Over the past four weeks, the former has changed by 0.41%, while the latter has changed by 0.29%. The benchmark S&P500 Composite Index stood at 1624.53 (31 Dec 2001=1000) and has changed over the past four weeks by -0.69%. The current calendar year spread between REPUVAR and the S&P500 is -2.85%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 11.57% and 8.55% respectively; the S&P500 Composite Index has changed by 19.56%. The trailing 12-month spread between REPUVAR and the S&P500 is -11.01%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 33.11% and 26.45% respectively; the S&P 500 Composite Index has changed by 39.96%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 1.77%, 23.51%, and 84.51% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 3.95%.

The spreads between the S&P500-only index informed by reputation metrics, REPUSPX, and the broad market index informed by reputation metrics, REPUVAR, for the calendar year and for the trailing twelve months respectively are 0.32% and 14.96%.

Other interval changes in the magnitude of the indices are shown in the tables and charts below.

Analysis

If not popping, the bubble is at least hissing. Time reports that the NASDAQ composite index, "which is down 1.2 percent in 2014 after two weeks of losses, fell 2.6 percent to 4,127.73, its largest one-day plunge since June 2012. Other indices also dropped Friday, with the S&P 500 down 1.25 percent the Dow Jones down nearly 1 percent.

The market's loss these trailing four weeks is not being shared by the reputation-linked indexes. After one quarter, the greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Cavium (CAVM), which holds on to first place with returns of 20.99%. Veolia Environmental SA (VE) moves up to second place with Napoleonic returns of 18.12% year to date. Weatherford Intl Ltd slips to third with returns of 18.00%. These are three of the 41 firms identified by the RepuStars Variety algorithm at the start of 2014 as value opportunities.

As for those whose reputational value may have been overestimated, Pharmacyclics (PCYC) is in the cellar with returns of -26.44, Rent-A-Center (RCII) slips back to -17.08% for the year, and Mobile Telesystems (MBT) moves down with returns of -13.78%.

Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Garmin (GRMN) at 19.40%, Entergy Corp (ETR) at 12.53% and Ameren (AEE) at 11.69%.

Side Note: A description of the portfolio constituents and historical returns data from December 31, 2001 can be obtained on request from Technology Option Capital, its manager. Click Here.

Background

The RepuStars® Variety Corporate Reputation Index calculated by S&P/Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re Reputational Value Metrics. The metrics comprise non-financial indicators of reputational value (RVM) and ranking (CRR). These are the same metrics that power the reputation controls provided by Consensiv, and the league table of reputational value, the Consensiv 50,  published periodically, and most recently January 1, 2014, by CFO.com.

The RepuStars Variety Corporate Reputation Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click on the ticker names for real time quotes.

The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to  Steel City Re’s proprietary Reputational Value Metrics™, which track 7400 companies weekly. The principles behind measuring reputational value are described in the book, Reputation, Stock Price, and You: Why the market rewards some companies and punishes others (2012, Apress).

The RepuStars indices are reconstituted annually in the first week of January and posted by S&P/Dow Jones Indexes in the third week. The Indices were last reconstituted 18 Jan 2014.

REPUSPX  is a pocket index with portfolio constituents being selected algorithmically by the same criteria as the constituents for REPUVAR and REPUVART, except that the field of eligible companies is limited to constituents of the S&P500 composite equity index.

The strategy used to pick the constituent members of REPUSPX, REPUVAR and REPUVART is discussed in the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (Apress, 2012). (Link below)

Reputation, Risk and Finance

Reputation management through superior control of a company's intangible assets may be one of the best paths to value creation today. If it is not on your agenda, perhaps it should be. Here are several things you can do right now to start creating value for your organization:

1. Become better informed. Participate in our regular Mission Intangible Monthly Briefings held on the second Friday of every month, read the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (2012)  or its predecessor, Mission: Intangible. Managing risk and reputation to create enterprise value (2010), available at the IAFS Store, specialty finance sector retailers, or other leading online book retailers
2. Become a member of the Intangible Asset Finance Society and engage.
3. Join our community on Linked-In and stay in the information flow.

Notices

S&P Dow Jones Indices is a registered trademark of S&P Dow Jones Indices LLC, a part of McGraw Hill Financial; RepuStars and Steel City Re” are registered trademarks of C. Huygens & Co. LLC. The method underpinning the RepuStars Variety indexes is subject to a pending patent assigned to C. Huygens & Co. LLC. S&P McGraw Hill Financial and its affiliate (S&P Dow Jones Indices) makes no representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and McGraw Hill Financial shall have no liability for any errors, omissions, or interruptions of any index or the data included therein. Past performance of an index is not an indication of future results. All information provided by S&P Dow Jones Indices is general in nature and not tailored to the needs of any person, entity or group of persons. S&P Dow Jones Indices receives compensation in connection with licensing its indices to third parties. It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments offered by third parties that are based on that index. S&P Dow Jones Indices does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that seeks to provide an investment return based on the performance of any Index. Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC, or their respective affiliates and none of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC and their respective affiliates make any representation regarding the advisability of investing in such products. Inclusion of a company in any of the indexes in this piece does not in any way reflect an opinion of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC or any of their respective affiliates on the investment merits of such company. None of Technology Option Capital, LLC, C. Huygens & Co, LLC, Steel City Re, LLC or any of their respective affiliates is providing investment advice in connection with these indexes.

Brazil: The cost of a bad reputation

C. HUYGENS - Friday, April 04, 2014
The central bank, which does not enjoy formal independence in Brazil, has increased the interest rate by 375 basis points since April 2013. The most recent increase this past Wednesday, ranks Brazil at the top of the league table for the most rate rises globally over the past year, according to Bloomberg data.

Reputation is a reflection of governance, controls and risk management. Weak governance comes at a cost. The Financial Times reports that "Brazil has been under pressure to regain the trust of the market. In March, Standard & Poor’s downgraded the country’s credit rating to BBB-, one notch above junk status, blaming several factors including the economic team’s lack of credibility."

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