Weekly Reputation Index Metrics
At the close of trading April 18, 2014, REPUVART and REPUVAR stood at 3597.62 and 2999.69 respectively. Over the past four weeks, the former has changed by 1.14%, while the latter has changed by 0.93%. The benchmark S&P500 Composite Index stood at 1624.32 (31 Dec 2001=1000) and has changed over the past four weeks by -0.09%. 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 13.20% and 10.57% respectively; the S&P500 Composite Index has changed by 20.97%. The trailing 12-month spread between REPUVAR and the S&P500 is -10.40%.
Over the trailing 36 months, the REPUVART and REPUVAR have changed by 34.52% and 27.61% respectively; the S&P 500 Composite Index has changed by 42.07%.
The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 2.87%, 23.98%, and 84.69% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 3.02%.
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 0.82% and 13.41%.
Other interval changes in the magnitude of the indices are shown in the tables and charts below.
AnalysisThe RepuStars family of algorithmically-driven equity portfolios all share one central hypothesis: the economically-relevant collective behaviors of the vast majority of stakeholders is a superior forecast of future value than the short-term economic behavior of equity investors.
Larry Fink, CEO of Blackrock, said as much in the Financial Times this week. “The rout in technology shares and gyrations in emerging markets have been driven by hedge funds rather than long-term investors,” the newspaper reported. “Mr Fink said technology stocks had borne the brunt of the selling because of their high valuations and oversize positions in the sector of a small number of hedge funds, neither of which would give a guide to the future performance of the shares.”
After a few weeks in Q2, the greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Rite Aid (RAD), which holds onto first place with returns of 28.09%. Weatherford International (WFT) returns to second with 24.13%, and back in the top three is Cavium (CAVM) with returns of 19.82%. 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 (PCYC) is in the cellar with returns of -33.61, Rent-A-Center Rent-A-Center (RCII) slips lower with with -17.96% for the year, and Mobile TeleSystems OJSC (MBT) is at -14.03%.
Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 35 names are Garmin (GRMN) at 20.38%, Entergy Corp (ETR) at 16.10% and Pepco (POM) at 14.12%.
Side Note: A description of the portfolio constituents and historical returns data from December 31, 2001 can be obtained on request from Technology Option Capital, its manager. Click Here.
BackgroundThe RepuStars® Variety Corporate Reputation Index calculated by S&P/Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re Reputational Value Metrics. The metrics comprise non-financial indicators of reputational value (RVM) and ranking (CRR). 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 FinanceReputation management through superior control of a company's intangible assets may be one of the best paths to value creation today. If it is not on your agenda, perhaps it should be. Here are several things you can do right now to start creating value for your organization:
1. Become better informed. Participate in our regular Mission Intangible Monthly Briefings held on the second Friday of every month, read the book, Reputation, Stock Price and You: Why the market rewards some companies and punishes others (2012) or its predecessor, Mission: Intangible. Managing risk and reputation to create enterprise value (2010), available at the IAFS Store, specialty finance sector retailers, or other leading online book retailers.
2. Become a member of the Intangible Asset Finance Society and engage.
3. Join our community on Linked-In and stay in the information flow.