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 Oct 24

C. HUYGENS - Saturday, October 25, 2014

Weekly Reputation Index Metrics


At the close of trading October 24, 2014, REPUVART and REPUVAR stood at 3561.10 and 2939.79 respectively. Over the past four weeks, the former has changed by -2.84%, while the latter has changed by -2.96%. The benchmark S&P500 Composite Index stood at 1711.19 (31 Dec 2001=1000) and has changed over the past four weeks by -0.92%. The current calendar year spread between REPUVAR and the S&P500 is -9.98%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by -3.07% and -4.99% respectively; the S&P500 Composite Index has changed by 12.13%. The trailing 12-month spread between REPUVAR and the S&P500 is -17.12%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 39.98% and 32.42% respectively; the S&P 500 Composite Index has changed by 59.85%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 2.40%, 9.03%, and 103.12% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -3.10%.

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 8.60% and 14.02%.

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.

McDonald's: Fear, uncertainty and doubt

C. HUYGENS - Thursday, October 23, 2014
McDonald's stakeholders need to hang on to more than a burger. The once-simple business model of innovative delivery of a simple menu at a fabulous price in a clean and secure environment has been under attack from so many quarters for so long that it is leaving stakeholders worried. The jump in the value risk (VR) metric below since August reflects this fear in much the same way that the Chicago VIX does.

McDonald's is a firm that achieved greatness through supply chain innovation, product innovation, real estate management innovation, workforce innovation, and marketing innovation. It stands to reason that one way out of this quandary of stakeholder uncertainty is to meet their expectations for -- innovation.

Consensiv's Jonathan Salem Baskin, writing for Forbes, states, "It’s hard to remember, but McDonald’s started out as the disruptor in its industry. Its innovations were many, ranging from standardized, efficient experience in menu and restaurant design, to great marketing. McDonald’s perfected, and then consistently improved the Holiday Inn model that allowed it to blow up thousands of quirky and sometimes risky hamburger stands, and replace them with food that was reliably good in restaurants that were consistently fine."

The bottom line: McDonald's should "…disrupt the industry completely, by flexing its resources muscles and embarking on changes that its competitors couldn’t copy or catch, and for which its customers would pay."

Read more at Forbes.

Nielsen's Ratings

C. HUYGENS - Tuesday, October 21, 2014
The reason reputation can be managed is that both its operational and expectation management underpinnings are themselves business processes that can be managed. Adverse reputational events represent a blossoming of failures of those underpinning processes -- a blossoming that can be mitigated with a recognized history of effective control that elicits from stakeholders forgiveness (read, expectation such an event will not happen again).

Nielsen NV, formerly Nielsen Holdings NV, is a Netherlands-based company engaged in information and measurement services. Since the advent of commercial television, it has been the standard for tracking and valuing viewership so time can be priced for advertising. The company reported earlier this month that it had discovered a glitch in its database that may have influenced its numbers since March of this year. Steven DiCarlo at the Daily Digest News suggests this could affect the company's reputation. Consensiv's Jonathan Salem Baskin explains why the company may be forgiven. Read more from Consensiv.

Quantitative measures of reputational value can bring much needed objectivity to this discussion. The data illustrated below show that Nielsen's reputational value metric dropped from the 94-96th percentile in late September to the 88-90th percentile this past week. Using standards developed by Consensiv for reputational control, a material change in reputation is evidenced by a persistent drop over 8 weeks. For control purposes, these data suggest intervention should be considered. Using standards developed by Steel City Re for indemnification, the drop these past two weeks is still within the bounds of normal historic volatility.

The data show that around $1billion of the company's market value (6%) can be reasonably ascribed to reputation value. The data also show that the company's reputational health is worrisome, which is a graphic way of illustrating the financial impact of the debate between and among stakeholders -- such as DiCarlo and Baskin.

The Underwriter’s View of Reputation Risk

C. HUYGENS - Sunday, October 19, 2014
When an adverse operational event blossoms into a full-blown reputation crisis, in addition to the often long-term nature of strategic financial consequences, the personal consequences for the company’s directors and officers can be significant.

Underwriting reputation risk involves an understanding of how such crises blossom, and how that might be mitigated. Read more from Risk & Insurance.

RepuStars 2014 Oct 17

C. HUYGENS - Saturday, October 18, 2014

Weekly Reputation Index Metrics


At the close of trading October 17, 2014, REPUVART and REPUVAR stood at 3479.72 and 2872.99 respectively. Over the past four weeks, the former has changed by -6.83%, while the latter has changed by -6.97%. The benchmark S&P500 Composite Index stood at 1643.40 (31 Dec 2001=1000) and has changed over the past four weeks by -6.15%. The current calendar year spread between REPUVAR and the S&P500 is -7.94%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by -5.49% and -7.35% respectively; the S&P500 Composite Index has changed by 8.86%. The trailing 12-month spread between REPUVAR and the S&P500 is -16.21%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 38.73% and 31.25% respectively; the S&P 500 Composite Index has changed by 53.97%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are -3.19%, 5.70%, and 95.72% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -3.17%.

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 7.14% and 13.04%.

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, 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 Oct 10

C. HUYGENS - Saturday, October 11, 2014

Weekly Reputation Index Metrics


At the close of trading October 10, 2014, REPUVART and REPUVAR stood at 3457.54 and 2856.69 respectively. Over the past four weeks, the former has changed by -8.93%, while the latter has changed by -8.99%. The benchmark S&P500 Composite Index stood at 1660.28 (31 Dec 2001=1000) and has changed over the past four weeks by -4.00%. The current calendar year spread between REPUVAR and the S&P500 is -9.54%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by -5.09% and -6.89% respectively; the S&P500 Composite Index has changed by 12.62%. The trailing 12-month spread between REPUVAR and the S&P500 is -19.51%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 40.71% and 33.22% respectively; the S&P 500 Composite Index has changed by 59.44%.

The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are -3.30%, 4.12%, and 104.02% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is -8.50%.

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 8.27% and 11.01%.

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.

JPMorgan Chase: Yawn, another cyber event

C. HUYGENS - Thursday, October 09, 2014
Nothing speaks reputation risk management success like having a boring crisis. No declarations of regulatory opprobrium from shocked regulators, although a few State Attorneys General are probing, looking for some political points. No demands for the heads of directors and officers from activist investors. No hand wringing in the blogosphere from any other aggrieved stakeholder group.

No one seems the least bit surprised. According to an analysis published by Consensiv, the reputation controls company, based on reputation value metrics we used by Steel City Re, JPMorgan Chase’s reputation premium, a measure of additional value arising from favorable stakeholder expectations, is up slightly to the 91st percentile within its peer group since the breach was first disclosed in July.

We just saw this movie with Home Depot.

Read more from Risk & Insurance.

GM: Reputation ain't necessarily better

C. HUYGENS - Tuesday, October 07, 2014
Nishit Madlani, an analyst at S&P, is finding encouraging signs at General Motors. "The company's performance over recent months has shown that recalls haven't impacted sales. Reputational damage did not transpire, for the most part," reports Bloomberg, according to Risk Management Monitor.

It ain't necessarily so. According to an analysis published by Consensiv, the reputation controls company, based on reputation value metrics used at Steel City Re, General Motors’ reputation premium, a measure of additional value arising from favorable stakeholder expectations, is down to the 40th percentile from the 55th within its peer group since March.

Hong Kong's Reputation Risk: Cause v. symptoms

C. HUYGENS - Monday, October 06, 2014
In the early days of spring 2014, debt markets celebrated as the prospects of Brazil's business-unfriendly government not being re-elected seemed possible. Such is the power of expectations to move markets.

What about expectations in Hong Kong? The protesters say the communist government is reneging on a promise of "universal suffrage."

John Tsang, Hong Kong's Finance Secretary, reveals that his “biggest fear” over the urban unrest is reputational risk. Jonathan Salem Baskin, an authority on reputation insights and controls, takes Mr. Tsang, to task. He's got it all wrong. The protests are a symptom. The protests are the expression of stakeholders' disappointment -- reputation risk being realized.

The source of reputation risk -- the cause -- was the government's action and its implications for the continued independence of Hong Kong. The amplifier of that risk is the unrest and the media coverage arising…but as Mr. Baskin has said many times before…the media are ONLY amplifiers. The same  holds for protesters, too. They're amplifiers. But that's the whole point of protesting, isn't it?

Read more.

Microsoft: New math

C. HUYGENS - Sunday, October 05, 2014
In the 1984 mockumentary, This is Spinal Tap, Nigel Tufnel, takes pride in an amplifier that is superior to all others -- it has volume knobs that go to eleven. When asked, "Why don't you just make ten louder and make ten be the top number and make that a little louder?," after much thought, Tufnel can only reply, "These go to eleven."



Consensiv's reputation insights and control authority Jonathan Salem Baskin, writing for Forbes, finds similar logic in the naming of Microsoft's latest operating system, the successor to Windows 8 known as Windows 10. "So 10 promises to combine the familiarity of 7 with some unnamed innovations in 8, along with additional, new features. The company should know by now that raising expectations of a “big leap” might not be such a smart branding strategy."

He has a point. Looking at objective measures of stakeholder expectations, expectations have apparently not been raised. The reputation value and risk metrics reveal much ado about nothing -- noise absent substance, again.

Read more.




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