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 2014 June 27

C. HUYGENS - Thursday, July 03, 2014

Weekly Reputation Index Metrics


At the close of trading June 27, 2014, REPUVART and REPUVAR stood at 3767.92 and 3126.34 respectively. Over the past four weeks, the former has changed by 2.46%, while the latter has changed by 2.31%. The benchmark S&P500 Composite Index stood at 1708.03 (31 Dec 2001=1000) and has changed over the past four weeks by 1.94%. The current calendar year spread between REPUVAR and the S&P500 is -3.61%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 13.15% and 10.94% respectively; the S&P500 Composite Index has changed by 21.56%. The trailing 12-month spread between REPUVAR and the S&P500 is -10.62%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 39.53% and 32.20% respectively; the S&P 500 Composite Index has changed by 51.23%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 2.55%, 16.83%, and 91.23% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -4.72%.

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 1.97% and 5.89%.

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

Background

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

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

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

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

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

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

Reputation, Risk and Finance

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

1. Become better informed. Participate in our regular Mission Intangible Monthly Briefings held on the second Friday of every month, read the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (2012)  or its predecessor, Mission: Intangible. Managing risk and reputation to create enterprise value (2010), available at the IAFS Store, specialty finance sector retailers, or other leading online book retailers
2. Become a member of the Intangible Asset Finance Society and engage.
3. Join our community on Linked-In and stay in the information flow 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 2014 June 20

C. HUYGENS - Friday, June 20, 2014

Weekly Reputation Index Metrics


At the close of trading June 20, 2014, REPUVART and REPUVAR stood at 3773.81 and 3131.93 respectively. Over the past four weeks, the former has changed by 3.39%, while the latter has changed by 3.24%. The benchmark S&P500 Composite Index stood at 1709.70 (31 Dec 2001=1000) and has changed over the past four weeks by 3.28%. The current calendar year spread between REPUVAR and the S&P500 is -3.53%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 15.13% and 12.84% respectively; the S&P500 Composite Index has changed by 23.59%. The trailing 12-month spread between REPUVAR and the S&P500 is -10.75%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 40.16% and 32.80% respectively; the S&P 500 Composite Index has changed by 51.51%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 4.01%, 17.97%, and 96.43% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -5.62%.

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 2.20% and 5.14%.

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

Analysis

There is little Huygens can add to the words of Jack Steiman, writing on June 20 for AdviceTrade.com:

there really is very little, if anything, to add to what I have been talking about for weeks, if not months. The market is somehow finding a way to hang in there against all the odds. The froth and greed are ramping higher by the day as the market hangs tough. Yet, through all this greed and froth the market doesn't fall. It should get crushed, yet it doesn't.

The greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Weatherford Intl. plc (WFT),which is in first place with returns of 57.12% for the year; Cavium Inc (CAVM) is in second place with returns of 45.10% for the year; and BRF SA (ADR) (BRFS) is third first place with returns of 28.05% for the year. These are three of the 41 firms identified by the RepuStars Variety algorithm at the start of 2014 as value opportunities.

As for those whose reputational value may have been overestimated, Pharmacyclics, Inc. (PCYC) is trailing the entire portfolio with returns of -34.24% for the year; VistaPrint Limited (VPRT) is second from last place with returns of -22.05% for the year; and Staples, Inc. (SPLS) is third from last with returns so far this year of -19.44%.

Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Pepco Holdings, Inc. (POM) is in first place with returns of 46.79% for the year; Entergy Corporation (ETR) is in second place with returns of 31.69% for the year; and Lorillard Inc. (LO) is in third place with returns of 31.65% for the year.

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

Background

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

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

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

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

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

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

Reputation, Risk and Finance

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

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

Double Secret Probation Warning to the Fed

C. HUYGENS - Wednesday, June 18, 2014
Signaling financial markets with extra-financial information creates value because it helps balance the asymmetry in information between insiders and outside investors. When the signal conveys lower risk, the result is an expectation of increased value. Consider this quote from the Financial Times for June 16, 2014 discussing how signaling can help reduce risk.

Note that the problem appears to be a belief in certainty by the markets and a belief in uncertainty by the IMF chief, and a request for the Fed chairwoman to increase the level of uncertainty in the markets through more frequent communications.

Ms. Lagarde…, the IMF chief(,) said the path for Fed policy remains highly uncertain, “while at the same time there seems to be a large amount of certainty in markets about where policy rates are going to go”…this “‘sets up the risk, even with a successful and well-communicated increase in interest rates, for significant swings in market flows and prices in the months ahead. If such volatility were to unfold, it would have implications that would reach far beyond US borders.” Ms Lagarde called for Fed chairwoman Janet Yellen to hold more frequent press conferences, up from the current four a year, to reduce the chances of a miscommunication.

RepuStars 2014 June 13

C. HUYGENS - Tuesday, June 17, 2014

Weekly Reputation Index Metrics


At the close of trading June 13, 2014, REPUVART and REPUVAR stood at 3716.76 and 3084.58 respectively. Over the past four weeks, the former has changed by 1.68%, while the latter has changed by 1.49%. The benchmark S&P500 Composite Index stood at 1686.43 (31 Dec 2001=1000) and has changed over the past four weeks by 3.10%. The current calendar year spread between REPUVAR and the S&P500 is -3.63%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 10.40% and 8.20% respectively; the S&P500 Composite Index has changed by 18.32%. The trailing 12-month spread between REPUVAR and the S&P500 is -10.12%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 40.02% and 32.67% respectively; the S&P 500 Composite Index has changed by 50.34%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 1.33%, 13.21%, and 91.24% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -5.11%.

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 1.39% and 5.01%.

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

Analysis

Huygens has signaled his discomfort for more than a year, and while he is not a bear in the sense that he does not short the market, he remains uncomfortable. He is not alone, but he and his peers who do short the market are being derided.

Take this opening paragraph from Bloomberg’s Callie Bost late last week: “For five years it’s been the fate of American short sellers to be wrong, as the biggest rally since the Internet bubble steamrolled defensive trades. They’re loading up again, sending bearish wagers..." The market continues to rally, and one has to wonder if the bearish bets are among the causes. "'Those short-sellers will have to cover and that actually can help push markets higher,” Kate Warne, a St. Louis-based investment strategist at Edward Jones, which oversees $787 billion, said in a June 4 interview at Bloomberg’s headquarters in New York.”

Market fundamentals and sentiment, like gravity, are forces to be reckoned with. In the meantime, turning to the quantitative metrics, the greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Weatherford Intl. Ltd (WFT) is in first place with returns of 52.35% for the year; Cavium Inc (CAVM) is in second place with returns of 49.02% for the year; and Rite Aid Corporation (RAD) is third first place with returns of 28.09% for the year. These are three of the 41 firms identified by the RepuStars Variety algorithm at the start of 2014 as value opportunities.

As for those whose reputational value may have been overestimated, Pharmacyclics, Inc. (PCYC) is trailing the entire portfolio with returns of -31.39% for the year; VistaPrint Limited (VPRT) is second from last place with returns of -20.13% for the year; and Staples, Inc. (SPLS) is third from last with returns so far this year of -19.58%.

Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Pepco Holdings, Inc. (POM) is in first place with returns of 46.04% for the year; Garmin Ltd. (GRMN) is in second place with returns of 29.66% for the year; and Entergy Corporation (ETR) is in third place with returns of 27.92% for the year.

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

Background

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

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

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

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

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

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

Reputation, Risk and Finance

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

1. Become better informed. Participate in our regular Mission Intangible Monthly Briefings held on the second Friday of every month, read the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (2012)  or its predecessor, Mission: Intangible. Managing risk and reputation to create enterprise value (2010), available at the IAFS Store, specialty finance sector retailers, or other leading online book retailers
2. Become a member of the Intangible Asset Finance Society and engage.
3. Join our community on Linked-In and stay in the information flow 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 2014 June 6

C. HUYGENS - Sunday, June 08, 2014

Weekly Reputation Index Metrics


At the close of trading June 6, 2014, REPUVART and REPUVAR stood at 3722.94 and 3091.30 respectively. Over the past four weeks, the former has changed by 2.75%, while the latter has changed by 2.60%. The benchmark S&P500 Composite Index stood at 1698.00 (31 Dec 2001=1000) and has changed over the past four weeks by 3.78%. The current calendar year spread between REPUVAR and the S&P500 is -4.14%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 11.03% and 8.87% respectively; the S&P500 Composite Index has changed by 20.15%. The trailing 12-month spread between REPUVAR and the S&P500 is -11.27%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 40.27% and 32.92% respectively; the S&P 500 Composite Index has changed by 51.71%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 1.39%, 17.58%, and 88.01% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -2.57%.

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 1.80% and 8.71%.

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

Analysis

Huygens remains uncomfortable. The housing bubble of the early ought’s fueled the equity bubble; and it was illiquidity from depreciating housing values that fanned the flames of the equity collapse. There is no shortage of chatter on global housing bubbles, again. And the band plays on.

Turning to the quantitative metrics, the greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Weatherford Intl. Ltd (WFT) is in first place with returns of 55.69% for the year; Cavium Inc (CAVM) is in second place with returns of 43.85% for the year; and Rite Aid Corporation (RAD) is third first place with returns of 38.10% for the year. These are three of the 41 firms identified by the RepuStars Variety algorithm at the start of 2014 as value opportunities.

As for those whose reputational value may have been overestimated, Pharmacyclics, Inc. (PCYC) is trailing the entire portfolio with returns of -30.84% for the year; VistaPrint Limited (VPRT) is second from last place with returns of -22.40% for the year; and Staples, Inc. (SPLS) is third from last with returns so far this year of -19.15%.

Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Pepco Holdings, Inc. (POM) is in first place with returns of 46.84% for the year; Garmin Ltd. (GRMN) is in second place with returns of 28.40% for the year; and Entergy Corporation (ETR) is in third place with returns of 27.75% for the year.

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

Background

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

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

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

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

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

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

Reputation, Risk and Finance

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

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

Emerging Trends in Reputation Risk Management

C. HUYGENS - Tuesday, June 03, 2014
A growing number of corporate pioneers are starting to treat the management of reputation risk as a separate function with formal reporting to the board, and some companies have restructured their leadership team and reporting systems: five of the FTSE 100 have introduced steering groups to focus on reputation risk.

Read more.

Target: It's Director season!

C. HUYGENS - Monday, June 02, 2014
Last week, activist investors called for the resignation of 7 of Target's 10 Directors for having failed in executing their duties of oversight as evidenced by the security breach in November. Its Director Season! Demands for their heads follows only weeks after these same Directors demanded the head of Target's Chairman and CEO. It's CEO Season!

(To Warner Brothers aficionados, it's both Duck and Rabbit Season.)



For four years, directors and officers have appreciated that adverse corporate reputational events -- cybersecurity in Target's case; ethics, innovation, safety, sustainability and quality events more generally -- will both impair most lines of their companies' income statements and also stain their personal reputations. This is because stakeholders are directing their grievances more and more at board members and corporate officers in increasingly more personal ways. D&O liability insurance may cover the litigation costs of stakeholder frustrations, but as these matters move from the legal system to the court of public opinion, the personal reputations of Directors and Officers are left to bear the full brunt of stakeholder activism – often blemishing decades of career success with disparaging innuendos. That is why they continue to declare through surveys and corporate 10K item 1’s that reputation risk is among their top concerns.

As of June 1, 461 CEO’s stepped down this calendar year, a removal rate that is up 17 percent from the same period last year. “CEOs are not only under increased scrutiny from shareholders, employees, government regulators and consumers, but these groups have more tools with which to amplify their complaints. Twitter, LinkedIn, Facebook, etc., make it far easier to rile up the masses,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas. Lead time is short. Activist investors started encouraging four directors of Duke Energy to step down only 12 weeks after the company’s February coal ash disaster.

It may be the 21st century, but in governance circles, human sacrifice has become the "new norm."

Amazon.com: Insight from reputation metrics

C. HUYGENS - Sunday, June 01, 2014
Last February, Harris Interactive, a marketing consultancy, reported that Amazon.com had landed in the top spot atop the reputation rankings of well-known companies. The press release went on to note that Apple, Google, along with The Walt Disney Company, Johnson & Johnson, and The Coca-Cola Company made the top five (er, perhaps six).

Amazon topped the Harris Interactive list again this year, and it ranked at the top of the North American league table of the Reputation Institute, another marketing consultancy. Bully for the marketers, says Jonathan Salem Baskin writing for Consensiv.  "The founding premise of the annual survey is pleasantly entertaining, much in the way that People magazine’s sexiest celebrity cover stories are fun for a fleeting moment, but the ranking provides no meaningful or actionable insights."

Let's look at metrics that do provide insight. The Steel City Re reputation metrics, as analyzed and reported by Consensiv, show that Amazon has experienced significant reputation erosion in the recent past evident in the current Reputation Premium of only 0.81% among the 29 firms in its internet retail peer group. The metrics, which are calculated weekly in contrast to the annual surveys from both Harris Interactive and the Reputation Institute, show something very important - extreme volatility in the Consensus Trend measure. Empirically, Consensus Trend measures in excess of 7% reflect a lack of coherence in stakeholder expectations and are signatures of pending or ongoing equity value erosion. At the close of markets Friday, Amazon was down 13% from its price November 1 having first peaked 10% higher in February. In contrast, the Nasdaq composite index is up about 8% making the net difference around -21%. From a risk perspective, Amazon's reputation is not at all healthy.

Baskin suggests that annual rankings are nice but not operationally useful. The empirically derived reputation metrics, on the other hand, are reported with sufficient frequency to enable management to do something about reputation other than gloat. This capability is useful when things take a turn for the worst.

RepuStars 2014 May 30

C. HUYGENS - Saturday, May 31, 2014

Weekly Reputation Index Metrics


At the close of trading May 30, 2014, REPUVART and REPUVAR stood at 3677.28 and 3055.75 respectively. Over the past four weeks, the former has changed by 1.16%, while the latter has changed by 1.05%. The benchmark S&P500 Composite Index stood at 1675.47 (31 Dec 2001=1000) and has changed over the past four weeks by 2.26%. The current calendar year spread between REPUVAR and the S&P500 is -3.90%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 6.29% and 4.13% respectively; the S&P500 Composite Index has changed by 16.27%. The trailing 12-month spread between REPUVAR and the S&P500 is -12.14%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 31.53% and 24.68% respectively; the S&P 500 Composite Index has changed by 43.00%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 0.07%, 14.81%, and 84.16% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -1.46%.

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 1.69% and 10.68%.

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

Analysis

Turning without further comment to the quantitative metrics, the greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Rite Aid Corporation (RAD) is in first place with returns of 49.55% for the year; Weatherford Intl. Ltd (WFT) is in second place with returns of 47.85% for the year; and Cavium Inc (CAVM) is third first place with returns of 39.11% for the year. These are three of the 41 firms identified by the RepuStars Variety algorithm at the start of 2014 as value opportunities.

As for those whose reputational value may have been overestimated, Pharmacyclics, Inc. (PCYC) is trailing the entire portfolio with returns of -34.29% for the year; VistaPrint Limited (VPRT) is second from last place with returns of -22.46% for the year; and Staples, Inc. (SPLS) is third from last with returns so far this year of -19.01%.

Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Pepco Holdings, Inc. (POM) is in first place with returns of 48.13% for the year; Garmin Ltd. (GRMN) is in second place with returns of 26.25% for the year; and Lorillard Inc. (LO) is in third place with returns of 25.57% for the year.

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

Background

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

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

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

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

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

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

Reputation, Risk and Finance

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

1. Become better informed. Participate in our regular Mission Intangible Monthly Briefings held on the second Friday of every month, read the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (2012)  or its predecessor, Mission: Intangible. Managing risk and reputation to create enterprise value (2010), available at the IAFS Store, specialty finance sector retailers, or other leading online book retailers
2. Become a member of the Intangible Asset Finance Society and engage.
3. Join our community on Linked-In and stay in the information flow 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 2014 May 23

C. HUYGENS - Wednesday, May 28, 2014

Weekly Reputation Index Metrics


At the close of trading May 23, 2014, REPUVART and REPUVAR stood at 3650.16 and 3033.78 respectively. Over the past four weeks, the former has changed by 1.63%, while the latter has changed by 1.47%. The benchmark S&P500 Composite Index stood at 1655.40 (31 Dec 2001=1000) and has changed over the past four weeks by 1.99%. The current calendar year spread between REPUVAR and the S&P500 is -3.37%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 5.62% and 3.45% respectively; the S&P500 Composite Index has changed by 15.15%. The trailing 12-month spread between REPUVAR and the S&P500 is -11.70%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 33.79% and 26.78% respectively; the S&P 500 Composite Index has changed by 44.39%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 0.90%, 13.42%, and 78.77% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -1.73%.

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 1.37% and 9.97%.

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

Analysis

Huygens has been pessimistic for more than a year, and certainly since November 2013 when the bottom dropped out of the RepuStars Variety Composite Equity Index which quickly lost 12% and opened up a spread with RepuSPX that at one point exceeded 20%.

Earlier this month, another voice joined the “bubble” chorus. In an article titled, “Time to Worry About Stock Market Bubbles,” David Leonhardt wrote for the New York Times, “Relative to long-term corporate earnings, stocks have been more expensive only three times over the past century than they are today, according to data from Robert Shiller, a Nobel laureate in economics. Those other three periods are not exactly reassuring, either: the 1920s, the late 1990s and in the prelude to the 2007 financial crisis.

Huygens has also quoted Citigroup’s Chuck Prince, who just before the market collapsed helpfully offered, “As long as the music is playing, you've got to get up and dance.” RepuSPX danced wildly last year; the new portfolio is outperforming again by about 3.5% but the twelve-month net return is less than the benchmark S&P500 owing to RepuSPX's embarrassingly high peak from a year ago.

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

Background

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

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

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

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

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

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

Reputation, Risk and Finance

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

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

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