Weekly Reputation Index Metrics
At the close of trading December 27, 2013, REPUVART and REPUVAR stood at 3596.84 and 3014.96 respectively. Over the past four weeks, the former has changed by -0.12%, while the latter has changed by -0.42%. The benchmark S&P500 Composite Index stood at 1603.90 (31 Dec 2001=1000) and has changed over the past four weeks by 1.97%.
Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 17.71% and 15.18% respectively; the S&P500 Composite Index has changed by 31.30%. Over the trailing 36 months, the REPUVART and REPUVAR have changed by 94.65% and 40.77% respectively; the S&P 500 Composite Index has changed by 33.57%.
Other interval changes in the magnitude of the indices are shown below.
AnalysisIt was a quiet week of holiday good cheer and unbridled market optimism. The bubble is stable. Risks assets that are constituent members of the S&P500 Index, selected using the RepuStars algorithm to create the REPUSPX portfolio, are returning nearly 32% more this calendar year than risk assets selected using the same algorithm but that are not constituents of the S&P500 (REPUVAR) see below.
In this perverse environment, REPUSPX’s returns for the trailing twelve months are 41.92% for a spread of 12.07% over the corresponding return from the S&P500. For the calendar year to date, the returns of REPUSPX are at 41.92% for a spread of 16.01% over the corresponding S&P500 return. Contrast those impossibly high returns for the algorithmically driven portfolio limited to equities of the S&P500 with the broader market. RepuStars Variety (REPUVAR) has returned 10.11% year to date for a spread of -15.81% to the corresponding S&P500 return, and returns of 14.16% for the trailing twelve months for a -15.69% spread over the S&P500.
The greatest gains in the portfolio for the year are being reported by GameStop Corp (GME), which ends the year in first place at 97.74%. Hain Celestial Group (HAIN) moves up to second for the year with year-to-date returns of 58.58%. Wellpoint Inc. (WLP) returns to third place with year to date returns of 55.46%. These are three of the 19 firms identified by the RepuStars Variety algorithm at the start of the year as value opportunities.
As for those whose reputational value has not panned for the year, Fusion I-O (FIO) is at an awful -59.67, CGG SA (CGG) is holding at -45.139%, and Royal Gold (RGLD) is up slightly at -41.09%.
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 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 20 Jan 2013.
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.