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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Reputation: Expectations need to be managed

C. HUYGENS - Sunday, August 25, 2013
In an essay in Forbes magazine, Mission Intangible Monthly Briefing moderator Jonathan Salem Baskin, Managing Director of Consensiv, a provider of reputation controls, explains why managing expectations is an important element of reputation value creation and protection. Read Batman, Ballmer, And The Dangers Of Expectations.

RepuStars 2013 August 24

C. HUYGENS - Saturday, August 24, 2013

Weekly Reputation Index Metrics


At the close of trading August 23, 2013, REPUVART and REPUVAR stood at 3591.32 and 3031.41 respectively. Over the past four weeks, the former has changed by 1.39%, while the latter has changed by 1.17%. The benchmark S&P500 Composite Index stood at 1448.94 (31 Dec 2001=1000) and has changed over the past four weeks by -1.66%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 24.62% and 22.04% respectively; the S&P500 Composite Index has changed by 17.88%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 121.25% and 80.77% respectively; the S&P 500 Composite Index has changed by 72.20%.

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

Analysis

As September approaches and we near the end of the silly season, news is sparse. Top issues this week according to the Financial Times, offered as proof, include the death of a princeling of the City (read, young investment banker) allegedly from overworking, an observation that retail stores have lost their focus, and that many fat companies would do well to split rather than merge or acquire. Then there is the persistent hope on/hope off vacillation of the market with respect to central bank support of equities. Through all this, the reputation-linked indices have thrived.

RepuSPX, now exceeding a 40% return for the year, maintained a healthy spread over the S&P500 while RepuStars (REPUVAR) again decreased its spread loss for the year to date. The greatest gains in the portfolio for the year are being reported by GameStop Corp (GME), which holds on to first place with returns of 108.15%, Wellpoint Inc (WLP) which holds onto second place with returns of 46.03%, and moving up to to third place with year to date returns of 44.80%, Hain Celestial Group (HAIN). These are three of the 19 firms identified by the RepuStars Variety algorithm at the start of the year as value opportunities.

As for those whose reputational value has not panned out so far, Fusion I-O fell further for a year-to-date loss of -52.24%. Scandal-plagued VeriFone Systems Inc. (PAY) is up at –33.86%, and CPFL Energia SA (CPL) is third from last with a loss of -21.37%.

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). The RepuStars Variety Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click here 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 20 Jan 2012.

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

Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”), a subsidiary of The McGraw-Hill Companies, Inc. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). “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 Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (“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 S&P Dow Jones Indices 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.

Social Media: Building brands but reflecting reputations

C. HUYGENS - Thursday, August 22, 2013
Many experts conflate definitions of “reputation” with those of “branding,” which usually leads to claims that communications strategies and tools are the mechanisms for creating and managing reputational value. They've got it wrong.

Brands are mental constructs of promises and associations among consumers, reputations are objective measures of ongoing reality and future expectations among a diverse collection of company stakeholders. The tools for controlling corporate reputations and risk are the standard tools of operational control coupled with the tools of stakeholder expectation management.

Social media can help to the extent that brand promises are among the influencers of stakeholder expectations. Read more here.

Dell: Computer company or soap opera?

C. HUYGENS - Monday, August 19, 2013
Dell, a company best known recently for the insider's baseball being played by its founder and various investors, also sells computers. There is merit in recalling this latter aspect of the business, since it is apparently not top of mind among many of the company's stakeholders.

Huygen's reported two weeks ago in a note titled "Anyone's Guess" that the Steel City Re reputation metrics were forecasting major changes at Dell evidenced by a material level of uncertainty; i.e., a high Consensus Trend. Huygen's also reported that expectations indicated by upward movements in the Reputation Premium signaled a net improvement in overall reputation and the value arising.

Lost in all this data of volatility and higher expectations is that one stakeholder group in particular was probably not overly excited by the turmoil: customers. The New York Times put it this way last week:

Dell reported net income of $204 million for its fiscal second quarter, down 72 percent from the same quarter a year ago. Revenue was $14.5 billion, about flat from the same period a year ago, but better than the $14.18 billion that Wall Street had expected, according to a survey of analysts by Thomson Reuters.

The net result: As the reputation metrics suggested two weeks ago, change, and slightly more value. For the week where Dell reported a 72% drop in net income, Dell's equity was up 0.57%; the S&P500 was down 2.10%

RepuStars 2013 August 17

C. HUYGENS - Saturday, August 17, 2013

Weekly Reputation Index Metrics


At the close of trading August 16, 2013, REPUVART and REPUVAR stood at 3496.91 and 2953.99 respectively. Over the past four weeks, the former has changed by 0.02%, while the latter has changed by -0.11%. The benchmark S&P500 Composite Index stood at 1442.26 (31 Dec 2001=1000) and has changed over the past four weeks by -2.14%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 21.27% and 18.81% respectively; the S&P500 Composite Index has changed by 16.76%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 120.48% and 69.32% respectively; the S&P 500 Composite Index has changed by 61.37%.

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

Analysis

It was a week of anomalies in the broader markets. World equities traded with a muted tone at the end of a week in which fresh signs of global economic recovery drove yields on highly-rated government bonds to multi-year peaks. Precious metals and industrial commodities also rose. The most compelling explanation: thin markets staffed by juniors whose bets will be reversed when the adults return from their vacations in two weeks.

RepuSPX maintained a healthy spread over the S&P500 while RepuStars (REPUVAR) again decreased its spread loss for the year to date. The greatest gains in the portfolio for the year are being reported by GameStop Corp (GME), which holds on to first place with returns of 91.85%, Wellpoint Inc (WLP) which holds onto second place with returns of 45.13%, and holding on to third place with year to date returns of 34.41%, Michael Kors Holdings (KORS). These are three of the 19 firms identified by the RepuStars Variety algorithm at the start of the year as value opportunities.

As for those whose reputational value has not panned out so far, Fusion I-O plummeted further for a year-to-date loss of -51.34%. Scandal-plagued VeriFone Systems Inc. (PAY) is unchanged at –36.36%, and Royal Gold Inc. (RGLD) is up significantly -22.25%.

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). The RepuStars Variety Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click here 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 20 Jan 2012.

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

Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”), a subsidiary of The McGraw-Hill Companies, Inc. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). “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 Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (“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 S&P Dow Jones Indices 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.

Blackberry: No more children's games

C. HUYGENS - Wednesday, August 14, 2013
From time to time, Huygens has to turn his back on his alma mater, the great University of the great Chicago, and acknowledge that markets can be profoundly inefficient. Equity prices are often driven by emotion; reputational value metrics are usually driven by rational expectations of a diversity of stakeholders that by virtue of their heterogeneity, dampen the emotional noise.

Equity investor emotion manifests in frankly goofy stock prices. For example, writes Value Walk, “Netflix has had a hell of a run in 2013, up over 170% year-to-date on big earnings results and short squeezes...But that run for Netflix, Inc. (NASDAQ:NFLX) stock might end in tears, and soon.” Driving a stock price to 329 times earnings suggests that investors are acting on sentiment more than fundamentals.

Turning to Blackberry (BBRY), Huygens has long advocated laying out the cutlery. The reputational value metrics were unambiguous two years ago. Well BBRY had another stock burst after it renamed itself (adult version of peek-a-boo) but that's over now and directors are seriously talking like adults about selling off the assets. Here are the most recent Steel City Re reputational value metrics.

The current tally: current reputational value (RVM) volatility in the top quintile (88th percentile measuring in at a Consensus Trend above 11% - change is coming. Reputational ranking, the Reputation Premium, at the 19th percentile - low expectations (finally) after an irrationally optimistic run in the high 60's that fueled silly economic returns approaching 150%.



Reputation is the (Academic) Word

C. HUYGENS - Tuesday, August 13, 2013
Events manifest in clusters. Recently, News Corp went through a painful transformation as the final stage of a reputation crisis centered around senior executive Rebekah Brooks and "over-the-top" phone hacking. Rewinding, it turns out that around the time that Rebekah Mary Wade Kemp Brooks was evolving her campaign to name and shame alleged pedophiles through News of the World across the pond -- the noble origins to the practice that got out of control -- a pedophile was sowing the seeds of a reputational crisis at the Pennsylvania State University.

When the scandal became public in 2011, it unleashed a cathartic conversation on a difficult subject that had touched surprisingly many people first-hand. The deeper questions were: How does an institutional culture arise to condone, or at least ignore, something that, individually, every member knows is wrong?31 How does one persist as a “perfect serial pedophile,” as the prosecution described Jerry Sandusky, the former Pennsylvania State University assistant football coach now convicted of molesting young boys.

In a blog note posted today, Jonathan Salem Baskin, better known to Society followers as the moderator of the Mission Intangible Monthly Briefings, reflects on reputation in academia. Read more.

RepuStars 2013 August 10

C. HUYGENS - Saturday, August 10, 2013

Weekly Reputation Index Metrics


At the close of trading August 9, 2013, REPUVART and REPUVAR stood at 3551.17 and 2999.83 respectively. Over the past four weeks, the former has changed by 2.55%, while the latter has changed by 2.40%. The benchmark S&P500 Composite Index stood at 1473.26 (31 Dec 2001=1000) and has changed over the past four weeks by 0.67%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 25.65% and 23.09% respectively; the S&P500 Composite Index has changed by 20.31%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 121.31% and 68.09% respectively; the S&P 500 Composite Index has changed by 60.20%.

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

Analysis

It was a complicated week for the markets, an OK week for RepuStars, and again a better week for RepuSPX As Huygens promised, starting this week, RepuSPX is being reported in the tables and charts below.

Huygens has suggested that the uncanny rise in the S&P500, and the even more uncanny rise in REPUSPX, is a bubble fueled by the central bankers’ depression of interest rates. There is too much cautious money, usually parked in bonds, chasing return in the safest equity vehicle: large US market indices. Consistent with this hypothesis, the graph below shows that REPUSPX generally tracked with REPUVAR until relatively recently.

Meanwhile, RepuStars (REPUVAR) again decreased its spread loss for the year to date. The greatest gains in the portfolio for the year are being reported by GameStop Corp (GME), which holds on to first place with returns of 97.46%, Wellpoint Inc (WLP) which holds onto second place with returns of 47.39%, and new to third place with year to date returns of 37.95%, Michael Kors Holdings (KORS). These are three of the 19 firms identified by the RepuStars Variety algorithm at the start of the year as value opportunities.

As for those whose reputational value has not panned out so far, Fusion I-O plummeted further for a year-to-date loss of -48.66%. Scandal-plagued VeriFone Systems Inc. (PAY) is up at –36.36%, and Royal Gold Inc. (RGLD) is up at -31.47%.

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). The RepuStars Variety Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click here 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 20 Jan 2012.

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

Standard & Poor’s and S&P are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”), a subsidiary of The McGraw-Hill Companies, Inc. Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). “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 Dow Jones Indices LLC, Dow Jones, S&P and their respective affiliates (“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 S&P Dow Jones Indices 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.

Reputation: It's about behavior, stupid!

C. HUYGENS - Thursday, August 08, 2013
As legend goes, the accidental marriage of chocolate and peanut butter produced a diversity of wonderful confectionary offspring. Each, a virtue on its own, produced in combination a superior experience.

The same can not be said about the marriage of branding and reputation. Branding, and the research that drives its understanding, is about awareness, likeabilty, emotional connection, and the elusive brand promise. It is an artifact of an overt communication campaign.

Reputation is about rational expectations. It is a psychological construct formed through a diversity of observations ranging from products of overt communications to directly observed behaviors, rumors, and innuendos.

Each a valid business construct that has implications for goals, resources and strategy, in combination they yield indeterminate goals, wasted resources, and unintelligible strategy that leaves nobody happy - not even Miley Cyrus. Read More.

Preposterous Reputation Management

C. HUYGENS - Monday, August 05, 2013
Huygens is on a rant. "You're doing it wrong!" "Backwards!" "You're treating the symptoms, not the cause!" It's the sort of behavior that can lead a man to drink.

Having practiced medicine for many years, Huygens knows that symptomatic treatment is, by definition any medical therapy of a disease that only affects its symptoms, not its cause. It is usually aimed at reducing the signs and symptoms for the comfort and well-being of the patient. In corporate speak, those who practice the art of treating symptoms -- say, with online reputation management -- feel better, even if the act creates no enterprise level benefits.

As every physician and nurse knows, symptomatic treatment is not exempt of adverse effects. Corporate examples -- again, say with online reputation management -- include mismanaging expectations, misallocating resources, and creating the appearance of willful blindness -- all fabulous fodder for litigants.

Consensiv's Managing Director, Jonathan Salem Baskin, known to Society followers as the effervescent moderator for the Mission Intangible Monthly Briefings, explains. Read his full discussion here.

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