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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Reputation Loss Can Feel Like A Death

C. HUYGENS - Thursday, November 09, 2017
Reputation is a vital aspect of our public selves. “Reputation is an instrument of moral justice, sharpened by mass communication — a dangerously double-edged one, open to misuse and misappropriation…”

Read more in Financial Times.

Read more on Reputation

Unaddressed Enterprise Risks Leave Boards Exposed

C. HUYGENS - Tuesday, November 07, 2017
Only 61% of respondents use enterprise risk management to inform strategy, says the Risk and Insurance Management Society.

“Responses from 397 respondents from more than 14 different industries were collected online from March 6 to May 6, 2017, according to RIMS….87% agree that executive management expects the ERM program to identify, prioritize, manage and monitor major risks.”

Read more in Business Insurance.

Read more on Enterprise Risk Management

Linking Enterprise Risks, Governance, and Reputation

C. HUYGENS - Sunday, November 05, 2017
“BP, Target and Volkswagen, (among others) have been prosecuted for various scandals and suffered financial and reputational damage…Ultimately, their failures can be attributed to poor governance and risk management…”

Read more in Risk Management Monitor.

Read more on Enterprise Risk Management

Repustars 2017 November 3

C. HUYGENS - Saturday, November 04, 2017

Weekly Reputation Index Metrics


At the close of trading November 3, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5805.88, 4667.71 and 3680.63 respectively. Over the past four weeks, the three have changed by -0.36%, 1.35%, and 1.34%. The benchmark S&P500 Composite Index stood at 2254.06 (31 Dec 2001=1000) and has changed over the past four weeks by 1.51%. The current calendar year spread between REPUVAR and the S&P500 is 3.93%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 26.84% and 25.24% respectively; the S&P500 Composite Index has changed by 23.90%. The trailing 12-month spread between REPUVAR and the S&P500 is 1.34%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 28.87% and 23.09% respectively; the S&P 500 Composite Index has changed by 28.61%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 27.87%, and 28.61% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 3.97%.

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 1.01% and -2.63%.

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.

Defending Reputation from a Weak Position Costs PG&E 19% of Market Cap

C. HUYGENS - Thursday, November 02, 2017
Disadvantaged in the court of public opinion from prior reputation impairment arising from the 2010 San Bruno gas explosion, PG&E is not receiving any benefit of the doubt. Its trailing 1 month returns are 19% below the S&P500.

“The cause of the California wine country fires is still under investigation, but a California power utility is emerging as a possible culprit…On Thursday (Oct. 12), California’s Public Utilities Commission ordered PG&E to preserve all evidence related to the fires, according to the Daily Beast.”

Read more in Quartz.

Read more reputation impairment.

Repustars 2017 October 27

C. HUYGENS - Saturday, October 28, 2017

Weekly Reputation Index Metrics


At the close of trading October 27, 2017, REPUSPX, REPUVART, and REPUVAR stood at 5885.29, 4695.60 and 3702.62 respectively. Over the past four weeks, the three have changed by 2.83%, 3.58%, and 3.56%. The benchmark S&P500 Composite Index stood at 2248.16 (31 Dec 2001=1000) and has changed over the past four weeks by 2.45%. The current calendar year spread between REPUVAR and the S&P500 is 4.93%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 23.87% and 22.28% respectively; the S&P500 Composite Index has changed by 21.00%. The trailing 12-month spread between REPUVAR and the S&P500 is 1.28%.

Over the trailing 36 months, the REPUVART and REPUVAR have changed by 29.94% and 24.12% respectively; the S&P 500 Composite Index has changed by 30.03%.

The trailing 12-month, and trailing 36-month returns for REPUSPX are 27.11%, and 30.03% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 6.10%.

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 0.12% and -4.83%.

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.

Reputation’s Going-Forward Effects

C. HUYGENS - Friday, October 27, 2017
The lag time between United Airlines' April 11, 2017 reputation risk event and visible effects is typical.

“Our data suggests that the real effects of reputation damage may take up to 13 weeks to first become evident and another 20 weeks to set in.”

Read more in Risk & Insurance.

Read more on reputation impairment.

Battles are Public and Personal Activist Investor Warns

C. HUYGENS - Sunday, October 22, 2017
Talk about personal reputation risk, ADP CEO Rodriguez recalls activist investor Bill Ackman telling him,

“I know you don’t like the media, but I do and I’m really good at it,” Mr Rodriguez said. “And if this gets into a public battle, it’s going to be bad for you personally, it’s going to be bad for the company, but I’m fine with it because — and he said this — I’m told that I’m only second to Donald Trump in terms of number of clicks on the internet, and hence you will lose if there’s a public relations battle.”

Read more in Financial Times.

Read more reputation risk and activists.

Wells Fargo: Another Damning Report

C. HUYGENS - Sunday, October 22, 2017
The latest blow to the reputation of Wells Fargo, #reputation #risk. OCC issues report on the bank's improper auto insurance practices...problem surfaced in July, after The New York Times obtained an internal report prepared for the bank’s executives.

“The comptroller’s findings …could force the bank to curb, or at least more closely monitor, its practices across the entire company. ”

Read more in New York Times.

Read more on current poster child for reputation risk, Wells Fargo

CEO Cult of Personality Exposes Boards to Reputation Risk

C. HUYGENS - Saturday, October 21, 2017
Cult of personality exposes boards to #reputation #risk

“Any business built on a strong personality [that's] unrestrained can lead to good and it can lead to risk. The point of good governance is to allow the good part of a strong personality to create value while restraining the bad part of a strong personality from creating risk. ”

Read more in Benzinga.

Read more on reputation and Boards of Directors.

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