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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RepuStars 2015 Feb 13

C. HUYGENS - Saturday, February 14, 2015

Weekly Reputation Index Metrics


At the close of trading February 13, 2015, REPUVART and REPUVAR stood at 3889.74 and 3196.91 respectively. Over the past four weeks, the former has changed by 8.18%, while the latter has changed by 7.98%. The benchmark S&P500 Composite Index stood at 1826.52 (31 Dec 2001=1000) and has changed over the past four weeks by 3.84%. The current calendar year spread between REPUVAR and the S&P500 is 4.48%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 13.16% and 11.12% respectively; the S&P500 Composite Index has changed by 14.60%. The trailing 12-month spread between REPUVAR and the S&P500 is -3.48%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 40.49% and 32.72% respectively; the S&P 500 Composite Index has changed by 55.28%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 6.24%, 21.17%, and 88.90% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 6.56%.

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 -1.18% and 10.04%.

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 on the Society's website (click here), and elsewhere.

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 at the close of the markets 16 January 2015.

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). Briefly, the design of the portfolio is governed by the theory that sometime over the course of the forward twelve months from portfolio construction, 3rd week of January in the current application, equity investors will come to appreciate the value implied by the reputation metrics.

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 and/or follow Twitter missives at #ReputationRisk.

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.

Practical Reputation Risk Management

C. HUYGENS - Thursday, February 12, 2015
In almost every type of business, pressure is on line functions to cut costs, on management to sustain operations at a profit, and on governance to ensure compliance and protect reputation. At times, over-zealousness at the line or management level places governance at risk.

CFO.com today describes one practical tool to protect Directors and Officers. Read more.

RepuStars 2015 Feb 6

C. HUYGENS - Friday, February 06, 2015

Weekly Reputation Index Metrics


At the close of trading February 6, 2015, REPUVART and REPUVAR stood at 3787.21 and 3112.95 respectively. Over the past four weeks, the former has changed by 4.55%, while the latter has changed by 4.36%. The benchmark S&P500 Composite Index stood at 1790.35 (31 Dec 2001=1000) and has changed over the past four weeks by 0.52%. The current calendar year spread between REPUVAR and the S&P500 is 3.70%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 13.07% and 11.04% respectively; the S&P500 Composite Index has changed by 15.90%. The trailing 12-month spread between REPUVAR and the S&P500 is -4.86%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 35.75% and 28.23% respectively; the S&P 500 Composite Index has changed by 52.59%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 2.19%, 21.81%, and 92.97% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 5.90%.

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 -0.99% and 10.76%.

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 on the Society's website (click here), and elsewhere.

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 at the close of the markets 16 January 2015.

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). Briefly, the design of the portfolio is governed by the theory that sometime over the course of the forward twelve months from portfolio construction, 3rd week of January in the current application, equity investors will come to appreciate the value implied by the reputation metrics.

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 and/or follow Twitter missives at #ReputationRisk.

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.

ThyssenKrupp: The value of good women

C. HUYGENS - Monday, February 02, 2015
Starting in 2016, more than 100 of the Germany's biggest listed companies will be forced to choose women when filling vacant supervisory board seats to reach the threshold of 30%. Ulrich Lehner, the supervisory board chairman of German steelmaker ThyssenKrupp AG, told journalists, according to Bloomberg, that "Good women are a rare commodity” for supervisory boards. The bar is not very high. From among the 40 million women, excluding German Chancellor Dr. Angela Merkel, a physicist who is conflicted as head of state, only 170 are needed to meet the quota.

Lehner's reactionary comments stirred up a debate on the Boards and Advisers affinity group on LinkedIn. Opinion aside, the objective Reputational Value Metrics show that there is significant upside to an evolution in Lehner's mindset. The company's reputational value ranking is at the 26th percentile relative to 43 peers, and its reputational value risk is at the 86th percentile with absolute Consensus Trend values hovering around 7% - a threshold usually associated with a forthcoming material change in equity value.

Given that the company's net reputational health is at the 16th percentile, it seems there is significant reputational value benefit -- ample returns, if you will -- for an investment in finding a few good women.

Consensiv 50 February 2015

C. HUYGENS - Sunday, February 01, 2015
The Consensiv 50 is an unweighted ranking of indicated reputational value drawn from the world's 1000 most valuable traded companies. The underlying reputational value metrics, calculated weekly for more than 7000 companies, are the underpinnings of Steel City Re’s reputational value insurances and the S&P Dow Jones RepuStars Variety Corporate Reputation Index (Ticker: REPUVAR), the world’s only reputation-linked composite equity index*. Read more about Consensiv's reputation insights and controls.


RepuStars 2015 Jan 30

C. HUYGENS - Friday, January 30, 2015

Weekly Reputation Index Metrics


At the close of trading January 30, 2015, REPUVART and REPUVAR stood at 3635.32 and 2989.95 respectively. Over the past four weeks, the former has changed by -0.41%, while the latter has changed by -0.52%. The benchmark S&P500 Composite Index stood at 1737.68 (31 Dec 2001=1000) and has changed over the past four weeks by -3.07%. 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 7.47% and 5.57% respectively; the S&P500 Composite Index has changed by 11.19%. The trailing 12-month spread between REPUVAR and the S&P500 is -5.62%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 37.51% and 29.98% respectively; the S&P 500 Composite Index has changed by 52.01%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 1.29%, 18.98%, and 96.91% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 7.79%.

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 1.81% and 13.41%.

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 on the Society's website (click here), and elsewhere.

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 at the close of the markets 16 January 2015.

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). Briefly, the design of the portfolio is governed by the theory that sometime over the course of the forward twelve months from portfolio construction, 3rd week of January in the current application, equity investors will come to appreciate the value implied by the reputation metrics.

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 and/or follow Twitter missives at #ReputationRisk.

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.

RepuStars 2015 Jan 23

C. HUYGENS - Saturday, January 24, 2015

Weekly Reputation Index Metrics


At the close of trading January 23, 2015, REPUVART and REPUVAR stood at 3663.81 and 3015.09 respectively. Over the past four weeks, the former has changed by -0.99%, while the latter has changed by -1.10%. The benchmark S&P500 Composite Index stood at 1787.18 (31 Dec 2001=1000) and has changed over the past four weeks by -1.77%. The current calendar year spread between REPUVAR and the S&P500 is 0.62%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 5.94% and 4.11% respectively; the S&P500 Composite Index has changed by 12.22%. The trailing 12-month spread between REPUVAR and the S&P500 is -8.11%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 40.00% and 32.41% respectively; the S&P 500 Composite Index has changed by 56.07%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 0.94%, 18.84%, and 100.39% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 6.63%.

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 1.75% and 14.73%.

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 at the close of the markets 16 January 2015.

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). Briefly, the design of the portfolio is governed by the theory that sometime over the course of the forward twelve months from portfolio construction, 3rd week of January in the current application, equity investors will come to appreciate the value implied by the reputation metrics.

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 and/or follow Twitter missives at #ReputationRisk.

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.

Capturing Latent Reputation Value

C. HUYGENS - Monday, January 19, 2015

RepuSPX and its bigger-tent cousin, RepuStars Variety, were designed to capture latent reputation value not evidenced by stock price. According to Technology Option Capital, the portfolio manager, there were two objectives. The first was to demonstrate that the indicators of value, the Reputational Value Metrics calculated by Steel City Re, provide useful information on enterprise value. The second was to obtain an indication of the magnitude of latent reputational value that could be realized when it becomes sufficiently transparent for investors to appreciate.

Weekly trailing 12-month returns of a simple reputation-based composite equity portfolio reconstituted algorithmically once a year from constituent members of the S&P500 composite equity index outperformed the S&P500 index 86.1% of the time. In 629 serial samples of trailing twelve month returns, RepuSPX generally outperformed SPX returning an excess of 9.5% on average (median 4.7%). In 91% of the cases of outperformance, the excess trailing 12-month returns were greater than 2%.

A time series plot shown below further demonstrates that there is useful information on latent (reputation-sourced) enterprise value in the Steel City Re Reputational Value Metrics. The cumulative price returns through 15 January 2015 are 362.5% for RepuSPX and 69.9% for the S&P500.

RepuStars 2015 Jan 16

C. HUYGENS - Saturday, January 17, 2015

Weekly Reputation Index Metrics


At the close of trading January 16, 2015, REPUVART and REPUVAR stood at 3595.62 and 2960.58 respectively. Over the past four weeks, the former has changed by -1.47%, while the latter has changed by -1.54%. The benchmark S&P500 Composite Index stood at 1758.95 (31 Dec 2001=1000) and has changed over the past four weeks by -2.47%. The current calendar year spread between REPUVAR and the S&P500 is 0.38%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 2.98% and 1.26% respectively; the S&P500 Composite Index has changed by 9.40%. The trailing 12-month spread between REPUVAR and the S&P500 is -8.14%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 42.25% and 34.61% respectively; the S&P 500 Composite Index has changed by 56.10%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are -0.62%, 14.94%, and 99.41% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 5.54%.

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 0.51% and 13.68%.

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 at the close of the markets 16 January 2015.

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). Briefly, the design of the portfolio is governed by the theory that sometime over the course of the forward twelve months from portfolio construction, 3rd week of January in the current application, equity investors will come to appreciate the value implied by the reputation metrics.

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 and/or follow Twitter missives at #ReputationRisk.

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.

Reputation at AirAsia: Airworthy or hot air?

C. HUYGENS - Wednesday, January 14, 2015
When compliance fails and/or risk manifests, the business world turns to lawyers and communicators. These are the signs of a crisis. So is a stock price drop of 7%. Monday's Risk & Compliance Journal (blog) at Wall Street Journal (paywall link) began its 2015 Crisis of the Week series by asking three experts to opine on the communications effectiveness of AirAsia (OTC:AIABF) following the still mysterious crash of flight QZ8501 in late December. 

Richard Nicolazzo, managing partner of the eponymous Boston-based crisis communications company, raved over AirAsia CEO Tony Fernandes' media performance. "…we have never seen a CEO use social media so effectively in managing a crisis." Alas, being all aTwitter has its downsides when facts are either not at hand, or worst, against you. Nicolazzo calls it bad luck. "..the facts surfacing recently from the transportation ministry [that AirAsia 8501 lacked the required permits from regulators to fly that day] are emerging at exactly the wrong time."

Anthony Johndrow, chief enterprise strategy officer of Reputation.com is not at all bothered by the regulation matter. He sees CEO ownership of the crisis and the assurances that "all will come out at right time" as the deciding actions. Tweeting good words means good outcomes, assures Johndrow, "Mr. Fernandes is still putting himself out there. If he continues down that path–and does not get caught lying while doing so–AirAsia will be seen and talked about favorably across the region for years to come.”

The nay-sayer of the three is Andrea Bonime-Blanc, chief executive and founder of GEC Risk Advisory. Leave it to the lawyer/PhD to be deeply troubled by the lack of permitting and licenses, and the CEO's lack of awareness of same. In an 'emperor's new clothes' moment, she asks, "Is there a disconnect or is there synchronization between the company’s public relations and the company’s risk and compliance culture?" To her, the tweeting admired by Nicolazzo and hailed by Johndrow is another source of risk (think about the Tony of BP). "If…image and PR are mere marketing devices that do not reflect the reality within the company, crisis and reputation management will be less successful or even disastrous depending on the issue, with attendant loss of stakeholder confidence and ultimately value to the company."

To Bonime-Blanc's credit, signs of a reputation crisis were evident at the outset. On the first trading day following the crash, AirAsia shares fell 7.1%, their biggest one-day drop in more than three years according to Seeking Alpha. That's the magic number she cites in her reputation risk handbook as being a marker of a reputation crisis. There are more -- it is a handbook, not a leaflet -- but this is not a book review.

There is one other company on the hook. German insurer Allianz (OTCQX:AZSEY) is the lead re-insurer to the missing plane, and was the main re-insurer to flight MH370 that disappeared in March, as well as flight MH17 which was shot down in Ukraine. Hello Richard Nicolazzo, this trifecta is what bad luck looks like -- unless, of course, it is merely the face of suboptimal underwriting processes. Since underwriting is the core capability expected of Munich Re by its stakeholders, this string of aircraft losses creates reputation risk for Munich Re, too, as shown below.


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