MISSION INTANGIBLE

M:I Products

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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Reputation Risk Due to Ethical Controls Failure

C. HUYGENS - Monday, July 31, 2017
Germany's big three groups, Volkswagen, Daimler and BMW, and VW units Porsche and Audi have been accused of holding secret meetings and colluding on technology. There are controls to prevent such ethical breaches. How can they fail?

“German managers are less aware of the financial consequences of wrongdoing than their US counterparts,” she says. There is less of a recognition that fines imposed by regulators for lawbreaking “can sometimes be so big they can ruin the company”.

Read more in the Financial Times.

Wells Fargo Digging Deeper Hole for Board

C. HUYGENS - Sunday, July 30, 2017
Senator Warren calls (again) on Fed to remove Wells Fargo board members, report Reuters, after The New York Times reported Friday that more than 800,000 Wells Fargo customers were charged for auto insurance they did not request. Activists such as Scott Stringer, who oversees public pension funds that hold roughly 11.6 million Wells Fargo shares, wants a new Chairman at least.

In a letter sent Friday to Yellen, Warren, a Democrat, said the recent revelation of more improper charges at the bank indicates "deep risk management problems," and called for the removal of all board members who served from 2011 to 2015, when the activity reportedly occurred.

The question stakeholders must be asking is "exactly how big is that iceberg of unethical behavior that has not yet been disclosed?"

Until Wells Fargo can authentically communicate to stakeholders that all that is being disclosed now comprises "sins of the past," they will continue to be on a downward reputational spiral. And with the battle over regulatory controls looming in Congress, as Kate Berry reports in American Banker, the bank's risk of further reputational damage with regulators is undercutting its objective of eliminating the CFPB.

Read more in the New York Times.

Repustars 2017 July 28

C. HUYGENS - Saturday, July 29, 2017

Weekly Reputation Index Metrics


At the close of trading July 28, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5618.41, 4430.21 and 3506.39 respectively. Over the past four weeks, the three have changed by 0.99%, 3.29%, and 3.26%. The benchmark S&P500 Composite Index stood at 2153.25 (31 Dec 2001=1000) and has changed over the past four weeks by 2.01%. The current calendar year spread between REPUVAR and the S&P500 is 3.45%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 19.63% and 18.12% respectively; the S&P500 Composite Index has changed by 13.92%. The trailing 12-month spread between REPUVAR and the S&P500 is 4.21%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 17.44% and 12.19% respectively; the S&P 500 Composite Index has changed by 25.49%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 20.34%, and 25.49% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 6.42%.

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 -0.79% and -2.22%.

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).
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 23 January 2017.

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. Click here for an analysis of periodic returns.

The design of the portfolio is governed by principles of behavioral economics, market signaling, and the implicit timing arbitrage between the behaviors of equity stakeholder and all other stakeholders.

Reputation, Risk and Finance

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.

Reputationally-impaired Benchmark Targeted

C. HUYGENS - Friday, July 28, 2017
Yes, a man-made product can have a reputation, and when that reputation--especially in financial services--is impaired, the product is likely a gonner. Consider the reputation of the benchmark rate, LIBOR,  now fatally impaired, and risking trillions of dollars in financial products. The LIBOR rigging…

“…scandal triggered $9bn fines for Barclays, UBS and Royal Bank of Scotland among others, and prison sentences for several traders. The lenders acknowledged that they had shifted the rates to boost their trading profits and to make their institutions seem healthier than they were in the financial crisis.”


Read more in the Financial Times.

Reputational Impact of Responsible Behavior

C. HUYGENS - Thursday, July 27, 2017
What regulatory reputational resilience looks like according to SEC Chairman Jay Clayton in the context of cyber security:

“If a company is being responsible . . . I don’t think we should then be punishing them for being a victim..."

Read more in the Financial Times.

Executives Become the Personification of Stakeholder Dissatisfaction

C. HUYGENS - Wednesday, July 26, 2017
"Whenever there’s a corporate misstep, stakeholders, from activist investors to customers to politicians, are giving public voice to their anger through social media, doing damage not only to corporate brands, but to individuals in corporate leadership positions.…The executives who are vilified during a crisis become the personification of stakeholder dissatisfaction. When they are targeted, the personal losses can be devastating."

Read more in the CEO World.

Repustars 2017 July 21

C. HUYGENS - Sunday, July 23, 2017

Weekly Reputation Index Metrics


At the close of trading July 21, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5676.91, 4437.65 and 3512.63 respectively. Over the past four weeks, the three have changed by 2.73%, 4.72%, and 4.69%. The benchmark S&P500 Composite Index stood at 2153.63 (31 Dec 2001=1000) and has changed over the past four weeks by 1.40%. 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 20.28% and 18.74% respectively; the S&P500 Composite Index has changed by 14.20%. The trailing 12-month spread between REPUVAR and the S&P500 is 4.54%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 17.44% and 12.18% respectively; the S&P 500 Composite Index has changed by 24.65%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 22.31%, and 24.65% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 8.12%.

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 -1.77% and -3.57%.

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).
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 23 January 2017.

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. Click here for an analysis of periodic returns.

The design of the portfolio is governed by principles of behavioral economics, market signaling, and the implicit timing arbitrage between the behaviors of equity stakeholder and all other stakeholders.

Reputation, Risk and Finance

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.

Doubt is the Face of Reputation Risk

C. HUYGENS - Thursday, July 20, 2017
In early July, international health insurance giant Bupa confirmed an employee had stolen data relating to 547,000 clients and was trying to sell it online. Reputation risk as a possible consequence of the cyber event.

“A cyber breach [including employee theft of computer data] does not necessarily damage an institution’s reputation,” Kossovsky said. “Reputation risk is the risk of leaving stakeholders disappointed and emotionally charged... (a)nd doubt, of course, is what reputation risk looks like.”

Read more in the Insurance Business.

Email Reputation Risk: Summer 2017 Edition

C. HUYGENS - Wednesday, July 19, 2017
Reputational risk is the risk of a verdict of culpability with prejudice and damages for emotional harm in the court of public opinion. The purpose of a reputation risk management strategy is to foster reputational resilience and a verdict of exculpation due to mitigating factors, according to Nir Kossovsky of Steel City Re.

“The entire notion of reputational risk is essentially a battle for the mind of the stakeholder. When a bad thing happens — as they always do — will the stakeholder say, ‘Yeah, that’s a bad thing, but it’s such a good company. It’s unfortunate, but they’re good people and they’ll recover.’  Or will they say ‘Yep, that’s what we expected. That’s a bad company and that’s one more thing we expected to come out of them.’”

Reputation risk management products such as insurances that behave like warranties help foster reputational resilience.

Read more in the Business Insurance.

Repustars 2017 July 14

C. HUYGENS - Friday, July 14, 2017

Weekly Reputation Index Metrics


At the close of trading July 14, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5646.88, 4425.22 and 3502.79 respectively. Over the past four weeks, the three have changed by 2.50%, 4.93%, and 4.90%. The benchmark S&P500 Composite Index stood at 2142.07 (31 Dec 2001=1000) and has changed over the past four weeks by 1.07%. 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 20.38% and 18.85% respectively; the S&P500 Composite Index has changed by 13.66%. The trailing 12-month spread between REPUVAR and the S&P500 is 5.19%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 18.79% and 13.48% respectively; the S&P 500 Composite Index has changed by 24.63%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 21.53%, and 24.63% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 7.87%.

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 -1.48% and -2.69%.

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).
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 23 January 2017.

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. Click here for an analysis of periodic returns.

The design of the portfolio is governed by principles of behavioral economics, market signaling, and the implicit timing arbitrage between the behaviors of equity stakeholder and all other stakeholders.

Reputation, Risk and Finance

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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