Weekly Reputation Index Metrics
At the close of trading February 21, 2014, REPUVART and REPUVAR stood at 3489.22 and 2918.92 respectively. Over the past four weeks, the former has changed by 3.10%, while the latter has changed by 3.00%. The benchmark S&P500 Composite Index stood at 1599.41 (31 Dec 2001=1000) and has changed over the past four weeks by 2.57%. The current calendar year spread between REPUVAR and the S&P500 is -3.66%.
Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 10.17% and 7.74% respectively; the S&P500 Composite Index has changed by 22.22%. The trailing 12-month spread between REPUVAR and the S&P500 is -14.48%.
Over the trailing 36 months, the REPUVART and REPUVAR have changed by 34.77% and 28.09% respectively; the S&P 500 Composite Index has changed by 39.59%.
The 4-week, trailing 12-month, and trailing 36-month returns for REPUSPX are 1.35%, 27.42%, and 79.86% respectively. The trailing 12-month spread between REPUSPX and the S&P500 is 5.20%.
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 0.20% and 19.69%.
Other interval changes in the magnitude of the indices are shown in the tables and charts below.
AnalysisThe equity markets remain hot and the appetite for risk is growing to the benefit of all the companies that missed out on the surge last year. In what is either a game of catch up for a diversity of firms buoyed by a frothy market, or too much money chasing deals and steering clear of obviously overvalued assets such as the S&P500, private equity was unloading through IPOs a diversity of assets acquired over the recent past. No, Huygens is not going to try to explain the $19B valuation for What’s App, but it does help explain the narrow 0.20% difference between RepuStars Variety and REPUSPX for the calendar year.
The greatest gains in the RepuStars Variety portfolio for 2014 year are being reported by Right Aid Corp (RAD) with a stunning 19.32% return year to date. Silver Wheaton (SLW) slip back to second with returns of 18.42, and Cavium (CAVM) slips back to third with returns of 14.31%. 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, Rent-A-Center is in the stocks with returns of -23.86, Mobile TeleSystems (MBT) is down further at -12.17 and Con-way is trailing but up slightly at -8.79% for the year.
Turning to RepuSPX whose constituents are limited to the S&P500 members, the top three performers in a portfolio of 31 names are Ameren (AEE) at 13.02%, Walgreen Company (WAG) up from third at 10.74%, and last week’s leader, Pepco Holdings (POM), at 10.53%
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.