Weekly Reputation Index Metrics
At the close of trading May 31, 2013, REPUVART and REPUVAR stood at 3405.78 and 2887.07 respectively. Over the past four weeks, the former has changed by -0.36%, while the latter has changed by -0.57%. The benchmark S&P500 Composite Index stood at 1420.41 (31 Dec 2001=1000) and has changed over the past four weeks by 1.01%.
Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 31.87% and 29.30% respectively; the S&P500 Composite Index has changed by 27.60%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 72.95% and 64.97% respectively; the S&P 500 Composite Index has changed by 52.30%.
Other interval changes in the magnitude of the indices are shown below.
AnalysisRational exuberance fed by the world’s central bankers continues to drive “errors in decision making” as termed by behavioral economists. Rational expectations, which are central to assessments of reputational value, are taking a back seat to other competing drivers of stock price. RepuSpx, a portfolio that seeks algorithmically to find the best reputation-linked opportunities among the S&P500 constituent members, continues to benefit from this effect. It is ahead of the market index for the calendar year by 7.91% this week, a slip back from last week. Its trailing twelve-month returns of 34.73% are beating the market by 10.28%, up another 110 basis points.
RepuStars, plagued by a few companies that have greatly disappointed stakeholders, decreased its spread loss by 9 basis points. The greatest gains in the portfolio for the year are being reported by GameStop Corp (GME) which returned to first place with returns of 33.71%, Wellpoint Inc (WLP) which moves back into second place with returns of 29.82%, and Michael Kors Holdings (KORS) which returns to the top three at 20.28% year to date returns. 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, now sans its founders, is down less at -34.44% Royal Gold Inc. (RGLD) is down less at -30.95%, and scandal-plagued VeriFone Systems Inc. (PAY) is about the same at a loss of -24.33%.
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.
BackgroundThe 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 FinanceReputation 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.