MISSION INTANGIBLE

M:I Products

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.

Read future M:I posts via RSS RSS

RepuStars 2013 March 16

C. HUYGENS - Sunday, March 17, 2013

Weekly Reputation Index Metrics


At the close of trading March 15, 2013, REPUVART and REPUVAR stood at 3289.75 and 2810.41 respectively. Over the past four weeks, the former has changed by -1.25%, while the latter has changed by -1.38%. The benchmark S&P500 Composite Index stood at 1359.40 (31 Dec 2001=1000) and has changed over the past four weeks by 2.69%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 14.08% and 12.13% respectively; the S&P500 Composite Index has changed by 11.15%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 62.38% and 55.44% respectively; the S&P 500 Composite Index has changed by 34.61%.

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

Analysis

Having survived three weeks of sequestration and the Ides of March, pessimism is abating. Optimism is hanging around. REPUVAR is regaining some ground.

Speaking of companies whose intangible assets, in terms of their excess cash-generating potential (Reputational Premium), appear to have been undervalued at the start of this calendar year, it is not yet rosy. The greatest gains in the portfolio for the year are being reported by Companhia Energetica Minas Gerais (ADR) (CIG) that has moved up from 3rd place with year to date returns of 20.20%. Lamar Advertising Co (LAMR), drops back to second place with a return of 19.95%, up a bit from last week. Genpact Ltd (G) is holding at third with a return of 10.49%. 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, the greatest disappointments this year are VeriFone Systems Inc. (PAY) at -32.83%; Fusion-IO, Inc. (FIO) at -22.62%, and Compagnie Generale de Gephysqu Vrts SA. (CGG) at -21.21%.

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 describe in the book, Reputation, Stock Price, and You (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 2013.

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.

JC Penny: Basement, no bargain

C. HUYGENS - Friday, March 15, 2013
If the owning the news cycle is the goal of public relations, JC Penny (JCP) needs a new shop. As Business Insider reports, "The retailer  has been on a terrible run. The last few weeks have been disastrous: it reported horrific Q4 earnings, went to court to fight Macy's over Martha Stewart, and had a board member dump a chunk of his stake." Caribou coffee opted not to open cafes in the stores.

Tally the butcher's bill: unnecessary litigation, abandonment by equity investor insiders, abandonment by partners, and no shortage of negative media chatter. It's a classical reputational value crisis.  Here's a link to how the Society's Mission Intangible Monthly Briefing moderator, Jonathan Salem Baskin, described the situation qualitatively to CNBC today: Baskin on CNBC.

Here's how the Steel City Re Reputational Value Metrics describe the situation quantitatively. Relative to 24 companies in the Retail Trade/Department Store sector, JCP has had the most volatile reputational value this year (Historic RVM Vol) indicating no consensus of expectations at one point in time. JCP now has the least volatile reputational value (Current RVM Vol) indicating that stakeholders are now in the tightest concensus about prospects. Unfortuanately, those prospects are awful with a CRR rank in the 9th percentile and the worst performing equity with an ROE of -60%. Worst, there is still room to fall and the metrics all indicate a further downward trend and low expectations for stability.

In his interview, Baskin suggested JCP should focus on its reputation. Expectations were very high when Ron Johnson, formerly of Apple, came aboard as CEO. They were at levels that could not possibly be met, and that is why the market is now punishing JCP (and for that matter, Apple). As Baskin said, "It breaks my heart."


Program - 29 March 2013 - Register Now

C. HUYGENS - Thursday, March 14, 2013

Briefing Friday 29 March at 10h00 ET

Program: Compliance: Is a goody-two-shoes reputation valuable?

In Billy Joel's New York, only the good die young. In post-Lehman New York, do the good have better prospects? When analysts make stock recommendations on the basis of environmental, sustainability and governance, factors, is there value in compliance? And what is one to make of the fact that fully half of the ten largest federal corporate criminal fines in history were imposed or agreed to in 2012.

Joining our conversation are Joan E. McKown, Partner, Jones Day and formerly the longtime chief counsel of the Division of Enforcement at the SEC; and Paul Liebman, an OCEG fellow, an ethics and integrity thought leader, and a member of the Society's Reputation Leadership Council.

Jonathan Salem Baskin
,  author of Tell the Truth, moderates. Learn more.. It's free. Register now.

Yum: Tasting better

C. HUYGENS - Wednesday, March 13, 2013
Whether the market rewards or punishes a company depends on what the market expects, according to the book Reputation, Stock Price and You. This week's news on YUM! Brands is illustrative.

From Reuters, good news as sales only fell 20% as a result of the toxic chickens disclosure.

KFC parent Yum Brands Inc reported an unexpected 2 percent rise in February sales at established restaurants in China, boosted by Chinese New Year and easing worries about a food safety scare that drove away customers. Shares in Yum jumped 6.6 percent in extended trading to $72.32, their highest level since November, after the results were far better than the estimated 8.7 percent drop expected by three analysts polled by Consensus Metrix. Yum also said on Monday first-quarter same-restaurant sales in China fell 20 percent, less than its prior forecast for a 25 percent drop.


Also from Reuters, more good news as Chinese appear to be less overtly angry -- or at least they're not talking about it.

Chinese consumers' anger at KFC over a food safety scare has abated as the number of negative posts about the fast food chain owned by Yum Brands Inc on the country's most popular microblogging platform fell by two-thirds. China's half a billion microbloggers posted 3 million overwhelmingly negative comments about KFC in the month that began on Dec. 18, when state media started reporting on the scare over contaminated chicken, a Reuters review of data from the Twitter-like platform Weibo shows. The number fell from Jan. 18 to Feb. 18, but microbloggers still posted more than 1 million comments on KFC, indicating that the largest foreign fast food chain in China still has its work cut out for it as it tries to reverse a steep sales slide.

The Steel City Re reputational value metrics provide an integrated view of expectations and the economic consequences of the behaviors arising. The data on YUM show that the company's arch rival, McDonald's (MCD) has benefited from the turmoil. By all of the reputational vital sign measures, MCD advanced. Both companies are at the low end of the spectrum of historic RVM volatility. RVM is a non-financial measure of reputational value. The absolute measures are in the 4-5% range, which on an actuarial basis place YUM at an imperceptibly  higher risk of material future market value loss. The current RVM volatility of MCD is also greater than YUM and is attributable in part to the significantly greater rise in ROE. The levels for MCD and YUM on the former measure both suggest a better than average future course. On these two measures, as well as the CRR, a measure of relative reputational ranking, MCD has benefited from YUM's slide. Going forward, the data suggest that many customers will come back. It is not clear, however, if equity investors are not getting to far ahead --  a variation on a parent's admonition take care lest one's eyes turn out to be bigger than one's stomach.

Amazon: A greater distance to fall

C. HUYGENS - Tuesday, March 12, 2013
Amazon.com (AMZN) recently emerged as the company Harris Interactive ranks as having the best reputation in 2012 among the general public in the U.S.  As Mark Hulbert explains in the Wall Street Journal, "companies that have great reputations tend to be overvalued." The implication is that Apple's fall from grace is the norm, not the exception, and Hulbert backs the claim with several academic studies. Part of the problem, as readers of this blog and the book, Reputation, Stock Price and You, already appreciate, is that the reputational rankings published by Harris Interactive, the Reputation Institute, and others are weakly associated with stock price because:

1. The surveys have several organic challenges
   a. They survey consumers, not necessarily investors.
   b. Historic return on investment is a factor in their reputation rating; by the time a survey is published, a company may be fairly or even over priced
   c. Rather than surveying reputation, which is a going forward expectation that will better correlate with stock price, Harris and others are actually surveying brand affinity. (These "reputation" rankings best correlate with brand recall studies).

2. Rankings do not correlate well. One of the best surveys is published by Barron's. This survey asks money managers to rank firms on the basis of respect. In 2012, the reputation rankings from Harris and the rankings from Barron's showed a 72% correlation. (The rankings from the Reputation Institute and Fortune Magazine's Most Admired companies showed a correlation of 21%.)

3. Reputational value is measurable. But surveys are not the best measurement tool if one is interested in financial reward or risk; i.e., finding stock-picking opportunities or insuring reputational value loss.

Turning to Amazon and the reputational value rankings from Steel City Re, which are based on stakeholder expectations and the behaviors that are expected to create value, the reputational vital signs show consistent top quartile rankings among the 21 companies in the internet retail sector. The historic RVM volatility, a measure of the tightness of the range of stakeholder expectations is great ranking in the 85th percentile. This indicates there were many stakeholders who were going to be surprised by Amazon's performance. The current RVM volatility shows that they are still being surprised, and the resulting ranking, the CRR, is tops. RVM is a non-financial measure of reputational value while CRR is a measure of reputational ranking - call it the reputation premium.

Interestingly, the ROE is not at the top, which reflects the pessimism of some equity investors who, as part of the overall group of stakeholders, are voting with their shares. The other measures shown below indicate an ongoing pattern of high RVM volatility, metrics that place Amazon in the extreme of various measures relative to its peer group, and values that all indicate greater than average risk of a 12-forward month risk of a 7.5% or more fall in market cap.

RepuStars 2013 March 8

C. HUYGENS - Tuesday, March 12, 2013

Weekly Reputation Index Metrics


At the close of trading March 8, 2013, REPUVART and REPUVAR stood at 3267.10 and 2791.06 respectively. Over the past four weeks, the former has changed by -1.88%, while the latter has changed by -2.01%. The benchmark S&P500 Composite Index stood at 1351.11 (31 Dec 2001=1000) and has changed over the past four weeks by 2.19%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 15.05% and 13.08% respectively; the S&P500 Composite Index has changed by 13.15%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 64.50% and 57.39% respectively; the S&P 500 Composite Index has changed by 36.01%.

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

Analysis

It is week two of the great sequestration. In the US, paychecks are smaller and government services are ratcheting down. Europe is still caught up in its shorts with Italy being downgraded and the UK threatening to walk. Did we mention that the North Koreans just annulled the 1952 Armistice? And while commodity prices are falling, the major US equity indices are rising and the VIX is actually falling. Go figure.

Turning to companies whose intangible assets, in terms of their cash-generating potential (Reputational Value Premium), appear to have been undervalued at the start of this calendar year, it has been brutal. The greatest gains in the portfolio for the year are being reported by Lamar Advertising Co (LAMR), which remains into first place with a return of 19.38%. Companhia Energetica Minas Gerais (ADR) (CIG) is new to the top 3 in second place with a return of 18.54%, and Genpact Ltd (G) is new at third with a return of 11.55%. 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, the greatest disappointments this year are VeriFone Systems Inc. (PAY) at -34.51%; Fusion-IO, Inc. (FIO) at -21.34%, and Compagnie Generale de Gephysqu Vrts SA. (CGG) at -20.84%.

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 describe in the book, Reputation, Stock Price, and You (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 2013.

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.

Boeing: Doubts lingering

C. HUYGENS - Tuesday, March 05, 2013
One of the hallmarks of a reputational value crisis arising from an operational failure is that the latter is appreciated by stakeholders as a systemic problem. While Boeing has not yet received approval by the US FAA to fly, and international airlines are watching closely, the investigations suggest that the series of problems each represented unique idiosyncratic events. As Boeing's engineers explained, "things happen."

The Huntington Post reported last week that "a probe into the overheating of a lithium ion battery in an All Nippon Airways Boeing 787 that made an emergency landing found it was improperly wired," according to Japan's Transport Ministry. Boeing reports that it has developed a "fix" for the batteries and that once the FAA approves the 22 February plan, the company is ready to execute. Details of the fix are not being widely circulated. Meanwhile, the Europeans are hedging their bets and moving to the older battery class for the Airbus.

James Surowiecki, writing for the New Yorker, sides with the Europeans. In a culture were the expectation for safety is now paramount, it is not clear how the FAA is going to be able to give Boeing clearance. "Boeing is in a business where the margin of error is small. It shouldn’t have chosen a business model where the chance of making a serious mistake was so large." The author of the Wisdom of Crowds suggests it was a mistake to "give other companies responsibility for the Dreamliner."

Turning the the measures of expectation, the Steel City Re Reputational Value Metrics, Boeing (BA) is one of 80 in the aerospace and defense sector and currently ranks in the 77th percentile. The chart of vital signs shows a rising Current RVM volatility. RVM is a non-financial measure of reputational value, and its volatility is the quantitative expression of the uncertainty reflected in the narrative above.  That being said, the current RVM volatility is still in the 1-2% range which is very low. Of note, should things go badly for Boeing, the odds of a material market cap fall are much greater than for the average company because its stakeholders, as evidenced by the low RVM volatility, are not used to being surprised. Ironically, a gently rising RVM volatility may help reduce the shock.

The indications are for little or very gradual change in the near future with a forecast for ongoing downward slope from the 77th percentile for the CRR, a measure of relative reputational ranking. ROE can be expected to lag. Background on the metrics can be found in the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others.

RepuStars 2013 March 1

C. HUYGENS - Saturday, March 02, 2013

Weekly Reputation Index Metrics


At the close of trading March 1, 2013, REPUVART and REPUVAR stood at 3173.05 and 2711.58 respectively. Over the past four weeks, the former has changed by -5.06%, while the latter has changed by -5.26%. The benchmark S&P500 Composite Index stood at 1322.38 (31 Dec 2001=1000) and has changed over the past four weeks by 0.33%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 11.46% and 9.55% respectively; the S&P500 Composite Index has changed by 10.85%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 62.57% and 55.58% respectively; the S&P 500 Composite Index has changed by 35.76%.

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

Analysis

The great sequestration has begun, paychecks are smaller in the US, Europe is still caught up in its shorts, and the UK is on the menu rather than at the table. And while commodity prices are falling, the major US equity indices are rising and the VIX is complacent. In this setting, RepuStars Variety (REPUVAR) resembles the meteorite that visited Siberia earlier this year.

Turning to companies whose intangible assets, in terms of their cash-generating potential (Reputational Value Premium), appear to have been undervalued at the start of this calendar year, it has been brutal. The greatest gains in the portfolio for the year are being reported by Lamar Advertising Co (LAMR), which moves into first place with a return of 14.75%, up about 4% from last week. Michael Kors Holdings (KORS), which drops to second place with a year-to-date return of 13.40%, up 0.2% from last week. Amerigas Partners (APU) is new in the #3 position with a 10.81% return for the year up around 2%. 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, the new greatest disappointment this year is VeriFone Systems Inc. (PAY) at -38.21%. Fusion-IO, Inc. (FIO) reduced its loss to -23.02% up 6%, while Royal Gold Inc. (RGLD) sank further at -22.35%.

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 describe in the book, Reputation, Stock Price, and You (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 2013.

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.

Program - 29 March 2013 - Register Now

C. HUYGENS - Friday, March 01, 2013

Briefing Friday 29 March at 10h00 ET

Program: Compliance: Is a goody-two-shoes reputation valuable?

In Billy Joel's New York, only the good die young. In post-Lehman New York, do the good have better prospects? When analysts make stock recommendations on the basis of environmental, sustainability and governance, factors, is there value in compliance? And what is one to make of the fact that fully half of the ten largest federal corporate criminal fines in history were imposed or agreed to in 2012.

Joining our conversation are Joan E. McKown, Partner, Jones Day and formerly the longtime chief counsel of the Division of Enforcement at the SEC; and Paul Liebman, an OCEG fellow, an ethics and integrity thought leader, and a member of the Society's Reputation Leadership Council.

Jonathan Salem Baskin
,  author of Tell the Truth, moderates. Learn more.. It's free. Register now.

Apple: Core disagreement

C. HUYGENS - Thursday, February 28, 2013
Apple Inc. is a firm that has sought to communicate a singular message through every channel. Whether the message was sent by the marketing department, investor relations, or the product team, the content was the same: Apple is an innovative company producing the coolest products on the plan.

It so happens that even with such clarity, stakeholders can get confused when it comes down to the details. Consider this post, a few weeks ago, labeled "contrarian." (1) Tim Cook is an innovator on the supply-chain side despite his stuffy reputation, (2) Apple Inc. (NASDAQ:AAPL) has the potential to "become a massive mobile-payment provider," (3) it still has the "best selection of apps of any mobile operating system," and most notably, (4) it predicts that "Apple’s sales in China are only beginning their upward arc."

Now fast forward to this week's shareholder meeting where investors are battling over Apple's use of cash and are expressing their unhappiness with executive compensation plans. The company is under pressure to return more of its cash hoard to investors after David Einhorn’s Greenlight Capital Inc. persuaded a judge to block a vote on whether to limit creation of preferred shares. According to Bloomberg, "Einhorn has used the lawsuit to drum up support among fellow investors to get Apple to return some of its $137.1 billion in cash and investments back to shareholders. The push comes as Apple’s stock has declined 36 percent from a record in September on concern that growth is slowing." The Financial Times reported that "at least a third of Apple’s shareholders have declined to back the company’s executive pay at its annual meeting, after chief executive Tim Cook was given a 51 per cent increase in his basic salary last year and other members of the management team were given big equity awards."

Wait. There's a contrarian view. Calpers, the largest US pension fund, disagrees with Einhorn. According the the Financial Times, Anne Simpson, head of corporate governance for Calpers, said that shareholder support for Apple’s proposed changes reflected a fundamental difference in approach between activists and long term shareholders. “Do you throw a brick through the window, or do you walk smartly up to the front door and ring the doorbell?” One of Einhorn's own investors took issue, too. In a letter to the founder of Greenlight Capital, the Nathan Cummings Foundation said: “By threatening to disenfranchise Apple shareholders, Greenlight Capital has acted in a manner that is not consistent with our understanding of Greenlight Capital’s own orientation and investment philosophy.”

There is ample anecdotal evidence that Apple's stakeholders are confused. What say the measures of reputation, which are nothing more than an indication of the economic consequences of stakeholder expectations. As provided by Steel City Re, the measures show, well, confusion.  Call it lack of consensus. RVM is a non-financial measure of reputational value, and its volatility is an indicator of alignment. Apple's current RVM volatility is up from the 33rd percentile among its peer group, its historical value, to the 48th percentile with recent spikes as high as 8% after running lows of sub 2%.  Stakeholders are surprised. They're not used to dealing with an unclear picture from Apple, and the cost of that confusion is the equity investors are fleeing.  In local parlance, Apple's reputational value premium, while still at the 86th percentile of its peer group, is no longer at the 100th percentile. The company is losing reputational value, which, as described in great detail in Reputation, Stock Price, and You, rarely goes unnoticed.




Recent Comments


SuMoTuWeThFrSa
     1
2
3
4
56
7
8
9
10111213
14
15
16
1718
19
20212223
24
25
26
27282930
31      
 

Subjects

Archive