On 26 March, Yahoo Inc. (NASD:YHOO) named three new independent directors to its board. Investors were demanding a shakeup since Carol Bartz was dismissed in amid a wave of colorful invectives last September.

At least one investor is still unhappy. Third Point LLC run by Daniel Loeb wanted to seat three of his own nominees, or absent that, himself. The owner of just under 6% of the firm promised a proxy battle.

Chairman Roy Bostock, whose reputation was tarnished by that encounter, and who announced in February that he will be stepping down, offered the usual platitudes about the benefits of the changes that were made. Stakeholders remain cautiously optimistic. The reputational metrics indicate that major operational changes are not expected in the new environment; rather, they suggest incremental improvements.


 
The Steel City Re brand of reputational benchmarks indicate that Yahoo's financial performance is at the median level for its peer group comprising 131 firms in the Internet Software and Services sector. Notwithstanding a relatively high reputational ranking of 94th percentile within this group, the firm is not expected to have major reputational changes. All reputational volatility measures are low and going forward stability measures are high. Nevertheless, the indicators show a slow positive change in reputational standing that may reflect optimism over the new CEO and pessimism over the new board and the upcoming proxy fight.

The company, which is a constituent member of the 2012 RepuStars Variety Corporate Reputation Index, is one of only 5 of 38 that have lost value since entering the index.

Weekly Reputation Index Metrics

The RepuStars® Variety Corporate Reputation Index calculated by Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re corporate reputation metrics. The RepuStars Variety Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click here for real time quotes.

Analysis

The equity markets gave back ground this week. The Dow Jones Average, the S&P500 Index and RepuStars Variety all slipped. The greatest gains in the 2012 RepuStars portfolio continue to be Veolia Environment Ve SA (VE) at 53.25% and Whirlpool Corporation (WHR) at 41.69%. Taking over third place is American Eagle Outfitters (NYSE:AEO) at 24.04%. These are three of the 38 firms identified by the RepuStars Variety algorithm as companies whose reputations had not been fully valued by equity investors at the start of the year.

Side Note: A description of the 2012 portfolio constituents can be obtained here: click here.

Weekly Update

At the close of trading 23-Mar-12, REPUVART and REPUVAR stood at 2884.28 and 2503.69 respectively. Over the past four weeks, the former has changed by 1.62%, while the latter has changed by 1.41%. The benchmark S&P500 Composite Index stood at 1216.91 (31 Dec 2001=1000) and has changed over the past four weeks by 2.30%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 9.89% and 8.50% respectively; the S&P500 Composite Index has changed by 6.34%. Since January 2009, the REPUVART and REPUVAR have changed by 130.50% and 118.00% respectively; the S&P 500 Composite Index has changed by 49.94%. Other interval changes in the magnitude of the indices are shown below.

Background

The RepuStars Variety Corporate Reputation Index is the first index based on a quantitative model for analysts, investors, and company managers to determine the actual impact of reputation on corporate equity prices. The companies selected for the RepuStars Variety Index are chosen algorithmically to capture the disparity between value at which a company is currently trading and its value as calculated by Steel City Re’s reputational metrics.

The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to their metrics as measured by Steel City Re’s proprietary Corporate Reputation Index™, which tracks 5500 companies weekly. In using the RepuStars Index as an investment strategy, investors can take advantage of this price disparity. The principles behind Steel City Re's reputation metrics are discussed in the book, Mission:Intangible (see below).

The RepuStars indices are reconstituted annually in the first week of January. The Indices were last reconstituted 20 Jan 2012.  Click here for additional information on the index.

Reputation, Risk and Finance

Reputation 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 first Friday of every month or read the book, Mission: Intangible. Managing risk and reputation to create enterprise value, 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.

Notices

STEEL CITY RE and REPUSTARS are registered trademarks of C. Huygens & Co. LLC and are used under license. 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. The RepuStars Variety Corporate Reputation Indexes are calculated by Dow Jones Indexes, the marketing name and the licensed trademark of CME Index Services, LLC. (CME Indexes). Dow Jones Indexes is a service mark of Dow Jones Trademark Holdings LLC. (Dow Jones). Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of investing in such product(s).

Weekly Reputation Index Metrics

The RepuStars® Variety Corporate Reputation Index calculated by Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re corporate reputation metrics. The RepuStars Variety Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click here for real time quotes.

Analysis

It was a good week for the equity markets. The Dow Jones Average and the S&P500 Index each reached 4-year highs, and RepuStars Variety reached an all time 10-year high. The greatest gains in the 2012 RepuStars portfolio continue to be Veolia Environment Ve SA (VE) at 59.47% Whirlpool Corporation (WHR) at 41.80% and Holly Frontier Corp at 27.55%. These are three of the 38 firms identified by the RepuStars Variety algorithm as companies whose reputations had not been fully valued at the start of the year.

Side Note: A description of the 2012 portfolio constituents can be obtained here: click here.

Weekly Update

At the close of trading 16-Mar-12, REPUVART and REPUVAR stood at 2883.71 and 2506.33 respectively. Over the past four weeks, the former has changed by 2.43%, while the latter has changed by 2.34%. The benchmark S&P500 Composite Index stood at 1223.06 (31 Dec 2001=1000) and has changed over the past four weeks by 3.15%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 13.85% and 12.51% respectively; the S&P500 Composite Index has changed by 9.77%. Since January 2009, the REPUVART and REPUVAR have changed by 130.45% and 118.23% respectively; the S&P 500 Composite Index has changed by 50.69%. Other interval changes in the magnitude of the indices are shown below.

Background

The RepuStars Variety Corporate Reputation Index is the first index based on a quantitative model for analysts, investors, and company managers to determine the actual impact of reputation on corporate equity prices. The companies selected for the RepuStars Variety Index are chosen algorithmically to capture the disparity between value at which a company is currently trading and its value as calculated by Steel City Re’s reputational metrics.

The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to their metrics as measured by Steel City Re’s proprietary Corporate Reputation Index™, which tracks 5500 companies weekly. In using the RepuStars Index as an investment strategy, investors can take advantage of this price disparity. The principles behind Steel City Re's reputation metrics are discussed in the book, Mission:Intangible (see below).

The RepuStars indices are reconstituted annually in the first week of January. The Indices were last reconstituted 20 Jan 2012.  Click here for additional information on the index.

Reputation, Risk and Finance

Reputation 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 first Friday of every month or read the book, Mission: Intangible. Managing risk and reputation to create enterprise value, 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.

Notices

STEEL CITY RE and REPUSTARS are registered trademarks of C. Huygens & Co. LLC and are used under license. 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. The RepuStars Variety Corporate Reputation Indexes are calculated by Dow Jones Indexes, the marketing name and the licensed trademark of CME Index Services, LLC. (CME Indexes). Dow Jones Indexes is a service mark of Dow Jones Trademark Holdings LLC. (Dow Jones). Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of investing in such product(s).

At a conference sponsored by the Three Rivers Chapter of the National Association of Corporate Directors, George L. Miles Jr., Director of AIG (NYSE:AIG), HFF Inc. (NYSE:HF), Harley-­‐Davidson, Inc. (NYSE:HOG), WESCO International, Inc. (NYSE:WCC), EQT Corporation (NYSE:EQT), observed that "the collapse of a company's reputation can stain its directors." The fallout from News Corp (NYSE:NWS) reputational crisis first arising from the phone hacking scandal continues. On March 14, James Murdoch informed the board of Sotheby's that he would not be seeking reelection. Previously, he stepped down from the board of GlaxoSmithKline and the chairmanship of News International, News Corp's UK newspaper division.

Weekly Reputation Index Metrics

The RepuStars® Variety Corporate Reputation Index calculated by Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re corporate reputation metrics. The RepuStars Variety Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click here for real time quotes.

Analysis

Although the markets had their worst day of 2012 this past Tuesday, and the Greek government’s default triggered $3B in CDS, both the S&P500 and the reputation-linked RepuStars Variety Composite Equity Index wrapped up the week about where they were seven days ago. The greatest gains in the 2012 RepuStars portfolio continue to be Whirlpool Corporation (WHR) at up 2.15% to 38.96%, Veolia Environment Ve SA (VE) up 2.27 at 38.93% and Holly Frontier Corp at 27.37%. These are three of the 38 firms identified by the RepuStars Variety algorithm as companies whose reputations had not been fully valued at the start of the year.

RepuStars Variety is a quantitative arbitrage strategy that assumes equity investors will discover what other stakeholders already know about a company’s prospects. With fear over the Euro-crisis progressively ebbing, risk appetites and a willingness to discover are returning.

Side Note: A description of the 2012 portfolio constituents can be obtained here: click here.

Weekly Update

At the close of trading 9-Mar-12, REPUVART and REPUVAR stood at 2839.64 and 2468.23 respectively. Over the past four weeks, the former has changed by 2.52%, while the latter has changed by 2.43%. The benchmark S&P500 Composite Index stood at 1194.05 (31 Dec 2001=1000) and has changed over the past four weeks by 2.10%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 10.34% and 9.05% respectively; the S&P500 Composite Index has changed by 5.11%. Since January 2009, the REPUVART and REPUVAR have changed by 126.93% and 114.92% respectively; the S&P 500 Composite Index has changed by 47.12%. Other interval changes in the magnitude of the indices are shown below.

Background

The RepuStars Variety Corporate Reputation Index is the first index based on a quantitative model for analysts, investors, and company managers to determine the actual impact of reputation on corporate equity prices. The companies selected for the RepuStars Variety Index are chosen algorithmically to capture the disparity between value at which a company is currently trading and its value as calculated by Steel City Re’s reputational metrics.

The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to their metrics as measured by Steel City Re’s proprietary Corporate Reputation Index™, which tracks 5500 companies weekly. In using the RepuStars Index as an investment strategy, investors can take advantage of this price disparity. The principles behind Steel City Re's reputation metrics are discussed in the book, Mission:Intangible (see below).

The RepuStars indices are reconstituted annually in the first week of January. The Indices were last reconstituted 20 Jan 2012.  Click here for additional information on the index.

Reputation, Risk and Finance

Reputation 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 first Friday of every month or read the book, Mission: Intangible. Managing risk and reputation to create enterprise value, 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.

Notices

STEEL CITY RE and REPUSTARS are registered trademarks of C. Huygens & Co. LLC and are used under license. 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. The RepuStars Variety Corporate Reputation Indexes are calculated by Dow Jones Indexes, the marketing name and the licensed trademark of CME Index Services, LLC. (CME Indexes). Dow Jones Indexes is a service mark of Dow Jones Trademark Holdings LLC. (Dow Jones). Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of investing in such product(s).

Mathew Philips, writing for Bloomberg Businessweek (March 7), is perplexed. After recounting recent history including the Securities and Exchange Commission's $550 million fine for misleading clients on securities that were "built to fail," the swaps engineered for the Greek treasury that went bad and exacerbated the nation's financial distress, and the apparent conflict of interest in the sale of El Paso to Kinder Morgan, he is faced with a troubling fact. "Goldman’s sullied reputation doesn’t appear to be negatively impacting its business. In fact, Goldman is outpacing its Wall Street competition recently in key areas of business. In 2011, Goldman was the top adviser for both global M&A and equity IPOs. A Bloomberg survey of traders, investors, and analysts last May showed that while 54 percent of respondents had an unfavorable opinion of Goldman, 78 percent believed that allegations it duped clients and misled Congress would have no material effect on its business."

Two quick charts on reputational value and reputational rankings based on Steel City Re data reinforce his observations: the reputational rank and reputational stability of Goldman Sachs are both in the top quartile of all 267 firms in the banking and financial services sector.





















By five of the key "vital sign" reputational metrics shown at left, Goldman Sachs is looking good. Yet its return on equity -- reward to its long suffering investors -- is the the 17th percentile within this peer group. Contrast Goldman Sach's reputational standing with another full-service investment bank, UBS. UBS with a market cap of $50B compared to Goldman's $57B, has a corporate reputational ranking in the mid 40th percentile even though its return on equity is slightly less negative. Goldman's PE is excess of 26 while UBS's is around 11.

We call this reputational resilience, and having tracked and measured Goldman Sach's reputation for the past three years, we are not surprised. Notes Philips, "There’s a reason why firms keep doing business with Goldman, and it’s not because of its sterling ethical reputation."

Indeed, it is not. The six key business processes that underpin reputational value are ethics, innovation, quality, safety, sustainability, and security. In the investment banking sector, it is hard to argue that one firm is more or less ethical than the other. That makes other drivers of reputation more valuable, and the evidence suggests the most important of them is innovation.

Opines William Cohan who studied Goldman Sachs and their culture and was interviewed by Philips: “This gets back to the advantages that Goldman has had for years over its competition. They attract the best and brightest people. They consistently have the best risk-taking culture on Wall Street. No one understands the markets as well as Goldman.”

Concludes Philips, "In short, if you want the smartest bankers, there’s a price to pay." The reputational value metrics and corporate reputation ranking data concur.

Weekly Reputation Index Metrics

The RepuStars® Variety Corporate Reputation Index calculated by Dow Jones Indexes is the first-ever composite equity index based on a quantitative value strategy informed by the Steel City Re corporate reputation metrics. The RepuStars Variety Index has two versions: a total returns index and a price index, whose ticker symbols are, respectively, REPUVART and REPUVAR.  Click here for real time quotes.

Analysis

The reputation-linked RepuStars Variety Composite Equity Index continues to outperform its benchmark for every key time interval. The greatest gains in the 2012 RepuStars portfolio are Whirlpool Corporation (WHR) at up 5.73% to 36.81%, Veolia Environment Ve SA (VE) at 36.66% and Silver Wheaton Corporation (SLW) down 3.69% at 19.33%. These are three of the 38 firms identified by the RepuStars Variety algorithm as companies whose reputation values have not been fully appreciated previously.

Side Note: A description of the 2012 portfolio constituents can be obtained here: click here.

Weekly Update

At the close of trading 2-Mar-12, REPUVART and REPUVAR stood at 2846.71 and 2475.11 respectively. Over the past four weeks, the former has changed by 2.50%, while the latter has changed by 2.42%. The benchmark S&P500 Composite Index stood at 1192.97 (31 Dec 2001=1000) and has changed over the past four weeks by 1.84%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 9.35% and 8.06% respectively; the S&P500 Composite Index has changed by 3.67%. Since January 2009, the REPUVART and REPUVAR have changed by 127.50% and 115.51% respectively; the S&P 500 Composite Index has changed by 46.99%. Other interval changes in the magnitude of the indices are shown below.

Background

The RepuStars Variety Corporate Reputation Index is the first index based on a quantitative model for analysts, investors, and company managers to determine the actual impact of reputation on corporate equity prices. The companies selected for the RepuStars Variety Index are chosen algorithmically to capture the disparity between value at which a company is currently trading and its value as calculated by Steel City Re’s reputational metrics.

The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to their metrics as measured by Steel City Re’s proprietary Corporate Reputation Index™, which tracks 5500 companies weekly. In using the RepuStars Index as an investment strategy, investors can take advantage of this price disparity. The principles behind Steel City Re's reputation metrics are discussed in the book, Mission:Intangible (see below).

The RepuStars indices are reconstituted annually in the first week of January. The Indices were last reconstituted 20 Jan 2012.  Click here for additional information on the index.

Reputation, Risk and Finance

Reputation 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 first Friday of every month or read the book, Mission: Intangible. Managing risk and reputation to create enterprise value, 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.

Notices

STEEL CITY RE and REPUSTARS are registered trademarks of C. Huygens & Co. LLC and are used under license. 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. The RepuStars Variety Corporate Reputation Indexes are calculated by Dow Jones Indexes, the marketing name and the licensed trademark of CME Index Services, LLC. (CME Indexes). Dow Jones Indexes is a service mark of Dow Jones Trademark Holdings LLC. (Dow Jones). Investment products based on the RepuStars Variety Corporate Reputation Indexes are not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones or their respective affiliates, and CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of investing in such product(s).