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 Assurance is a Nobel Idea

C. HUYGENS - Monday, October 09, 2017
Reputation-sparing “governance warranty” can nudge stakeholders to forgive Board failure, according to the Nobel-prize winning behavioral economic model of Richard Thaler.

Thaler brought to prominence the idea of "nudge" economics, where individuals are subtly guided toward beneficial behaviors without heavy-handed compulsion.

Read more in New York Times

More on nudging through signaling and storytelling: http://www.iafinance.org/mission-intangible/tag/signaling/.

Repustars 2017 October 6

C. HUYGENS - Saturday, October 07, 2017

Weekly Reputation Index Metrics


At the close of trading October 6, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5826.57, 4605.51 and 3631.94 respectively. Over the past four weeks, the three have changed by 4.93%, 4.69%, and 4.61%. The benchmark S&P500 Composite Index stood at 2220.52 (31 Dec 2001=1000) and has changed over the past four weeks by 3.57%. The current calendar year spread between REPUVAR and the S&P500 is 4.07%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 18.32% and 16.76% respectively; the S&P500 Composite Index has changed by 17.98%. The trailing 12-month spread between REPUVAR and the S&P500 is -1.22%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 29.47% and 23.54% respectively; the S&P 500 Composite Index has changed by 31.74%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 21.84%, and 31.74% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 3.86%.

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 -0.96% and -5.07%.

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.

Alternative Message Overwhelms Strategic Intent

C. HUYGENS - Thursday, October 05, 2017
The backdrop sign's story overwhelms 4 days of Tory talk...signaling stakeholders a message undercutting the strategic intent of the multi-day party retreat; and reminding us that message, like price, is often set at the margin.

One Tory staffer, grimacing after letters began falling off a sign bearing the conference slogan — “Building a country that works for everyone” — said: “It could have been worse: I thought the ‘o’ might fall off the word ‘country’.”


Warranties, operating at the margin, have similar power. That is one of the reasons why Reputation Assurance is an effective strategic solution.

Read more in Financial Times

More on alternative messaging.

Reputation Risk of Association

C. HUYGENS - Wednesday, October 04, 2017
Details of the network of relationships that has ensared both McKinsey and KPMG, and fostered the demise of Bell Pottinger show signs of risk management but insufficient risk mitigation.

"I view Eskom’s lying about its relationship with McKinsey and Trillian as an assault on our democracy," Public Enterprises Minister Lynne Brown said in Cape Town on Wednesday. "If the truth had been told first, then the investigation into the contracts could have been far advanced at this stage."


Read more in Bloomberg

Click here for more on McKinsey

Repustars 2017 September 29

C. HUYGENS - Sunday, October 01, 2017

Weekly Reputation Index Metrics


At the close of trading September 29, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5723.56, 4533.26 and 3575.51 respectively. Over the past four weeks, the three have changed by 2.86%, 2.47%, and 2.35%. The benchmark S&P500 Composite Index stood at 2194.41 (31 Dec 2001=1000) and has changed over the past four weeks by 1.73%. The current calendar year spread between REPUVAR and the S&P500 is 3.58%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 17.75% and 16.20% respectively; the S&P500 Composite Index has changed by 17.12%. The trailing 12-month spread between REPUVAR and the S&P500 is -0.92%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 25.26% and 19.54% respectively; the S&P 500 Composite Index has changed by 27.74%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 23.89%, and 27.74% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 6.77%.

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 -0.70% and -7.69%.

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.

P&G Has No Credible Shark Repellant.

C. HUYGENS - Saturday, September 30, 2017
When sharks attack reputation, a warranty on governance--shark repellent--improves the odds of a board prevailing. P&G does not have Steel City Re’s Reputation Assurance.

"The odds of activist investor Nelson Peltz’s winning a board seat at Procter & Gamble are improving after the two most influential independent proxy advisory firms, ISS and Glass Lewis, both recommended shareholders should vote in his favour."


Read more in Financial Times

More on P&G: http://www.iafinance.org/mission-intangible?TagID=11231

Further Evidencing the Value of Reputation Risk Mitigation

C. HUYGENS - Friday, September 29, 2017
Reputation risk costs mount. One CEO, six directors, 95% of directors' compensation etc. etc. Better to create value with an ethical story stakeholders understand and is completely credible. Reputation Assurance by Steel City Re, described as a warranty on governance, should be part of that story. More on VW: http://www.iafinance.org/mission-intangible?TagID=292804

"The costs of fixing and repurchasing diesel cars in the US had been unexpectedly high, VW said on Friday, sending its shares down almost 3 per cent. The diesel scandal, in which VW has admitted installing software to cheat emissions tests in up to 11m cars worldwide, has already cost the carmaker up to $24bn."


Read more in Financial Times

Uber Acknowledges Cost of a Bad Reputation

C. HUYGENS - Monday, September 25, 2017
Uber CEO Dara Khosrowshahii explains the loss of the company's license to operate in London:

“The truth is that there is a high cost to a bad reputation. Irrespective of whether we did everything that is being said about us in London today (and to be clear, I don't think we did), it really matters what people think of us, especially in a global business like ours, where actions in one part of the world can have serious consequences in another.”


Read more in Inc.

Trump and Timing the Measurement of Reputation Loss

C. HUYGENS - Sunday, September 24, 2017
The loss and stabilization of President Trump's reputation mirrored the pattern seen with event-driven corporate reputation losses, as predicted by Steel City Re on May 19.

Reputation value loss is indemnifiable through Steel City Re's reputation assurance solutions. Determination of the magnitude of the loss is made 20 weeks after recognition of all three triggers of the policy. This time window for discovery of the actual going-forward magnitude of reputation value loss was memorialized in Steel City Re's processes after the empirical study of of tens of thousands of  reputational loss events. The bottom line, is that at around 20 weeks after an event is recognized by stakeholders,  the resuilting corporate reputation stabilizes at its new level. This level becomes the new corporate reputation baseline until a new adverse event or favorably surprise shocks the market and materially resets the reputational value again.

On the basis of this empirical model, Steel City Re predicted in the Financial Times on 19 May that President Donald Trump's deteriorating reputation would stabilize on or about 18 September 2017. Reports from NPR and Rasmussen Reports published on 22 and 23 September confirm this prediction.

From NPR: President Trump's poll slide appears to have stabilized.

From Rasmussen Reports:  The Rasmussen Reports daily Presidential Tracking Poll for Friday shows that 43% of Likely U.S. Voters approve of President Trump’s job performance. Fifty-five percent (55%) disapprove.

The latest figures include 27% who Strongly Approve of the way the president is performing and 44% who Strongly Disapprove. This gives him a Presidential Approval Index rating of -17. (see trends).

The Steel City Re model suggests that the current measure of reputational value will be stable until a shock such as a major event on the Korean peninsula or revelations from Robert Mueller’s sprawling special-counsel investigation resets stakeholder expectations once again.

Repustars 2017 September 22

C. HUYGENS - Saturday, September 23, 2017

Weekly Reputation Index Metrics


At the close of trading September 22, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5690.51, 4508.73 and 3556.67 respectively. Over the past four weeks, the three have changed by 3.90%, 4.93%, and 4.77%. The benchmark S&P500 Composite Index stood at 2179.48 (31 Dec 2001=1000) and has changed over the past four weeks by 2.42%. The current calendar year spread between REPUVAR and the S&P500 is 3.73%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 16.23% and 14.67% respectively; the S&P500 Composite Index has changed by 14.93%. The trailing 12-month spread between REPUVAR and the S&P500 is -0.26%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 23.22% and 17.56% respectively; the S&P 500 Composite Index has changed by 26.20%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 21.87%, and 26.20% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 6.94%.

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 -0.63% and -7.20%.

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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