The rating agencies received an earful for mis-rating debt obligations collateralized by tranches of securitized mortgages. Investors alleged that Moody's (MCO) and others misled them. The rating agencies reminded the investors that ratings comprise first amendment-protected speech -- opinions, if you will -- and that no one is under any obligations to accept them as fact nor rely on them as oracular truths. The markets are taking the hint.

Bloomberg describes the problem this way (Campbell and Moore, 22 June): "Moody’s Investors Service suffered a downgrade of its own as markets responded to the company’s rating cuts of 15 of the world’s largest banks by bidding up the value of their stocks and bonds...'We view the Moody’s downgrade as another overhyped story of 2012,' David Trone, analyst at JMP Securities LLC, wrote to his clients. 'The corporate market thinks for itself and credit rating agencies are often lagging indicators.'"

Turning to the Steel City Re reputation metrics, Moody's reputation ranking has rarely been greater than the median over the trailing twelve months -- a point that is quite telling for what may be the best recognized brand in the business. With respect to vital signs, Moody's is currently ranked in the 60th percentile relative to its peers, its return on equity is at the 50th percentile, is reputational volatility creeping up from the 20th to the 27th percentile, and its stability is only at the 13th percentile. Oh yes, the change of direction indicators are all negative. Times are a changin'.

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 ranking metrics. The metrics comprise non-financial indicators of reputational value. 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

Greece voted, disaster was averted, the markets celebrated, the markets crashed, and then came Friday. Is this any way to run a capital market? RepuStars is a value-based algorithm driven by expectations. What do expectations look like when the world turns upside down weekly? Still, Repustars Variety is outperforming the S&P500 for the calendar year.

Turning to companies who appear to have been undervalued at the start of this calendar year, the greatest gains in the 2012 RepuStars portfolio are being reported by Vertex Pharmaceuticals (VRTX) with a year-to-date climb of 66.92%. American Eagle Outfitters (AEO) is in second place at 41.06% for the year. In third place, Questcor Pharmaceuticals takes the prize returning for the year 43.88%. These are three of the 38 firms identified by the RepuStars Variety algorithm at the start of the year as value opportunities.

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

Weekly Update

At the close of trading June 22, 2012, REPUVART and REPUVAR stood at 2705.79 and 2335.71 respectively. Over the past four weeks, the former has changed by 0.81%, while the latter has changed by 0.64%. The benchmark S&P500 Composite Index stood at 1162.83 (31 Dec 2001=1000) and has changed over the past four weeks by 1.31%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 2.44% and 0.97% respectively; the S&P500 Composite Index has changed by 5.25%. Since January 2009, the REPUVART and REPUVAR have changed by 116.23% and 103.38% respectively; the S&P 500 Composite Index has changed by 43.27%. 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 help demonstrate the 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 Rank™, which tracks 7000 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 and posted by Dow Jones Indexes in the third week. 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).

On July 13, the Mission Intangible Monthly Briefing  looks at patents in a program titled Total Patent War.  To warm up our global audience in advance of the broadcast, we offer a guest note from Rob Aronoff, Managing Partner, Pluritas, LLC.

InterDigital-Intel and AOL-Microsoft Transactions, Add Cash & Unlock “Hidden” Shareholder Value

CEOs, Boards of directors, activist investors are only just now realizing that the cash generated by recent patent sales is only one part of their success. Additionally, hundreds of millions of dollars of heretofore “hidden” shareholder value has been unlocked without compromising competitiveness.

The InterDigital-Intel sale for $375 million in cash netted Intel buyer 1,700 patents. To achieve this InterDigital did not need to give away the store, as some in the financial media have reported. Additionally, InterDigital stock rose almost 30% in a single day of trading following the announcement.

Also overlooked by financial analysts in the recent sale by AOL of 925 patents and patent applications to Microsoft for $1.1 billion dollars has been its material impact on shareholder value. The deal not only generated for AOL holders than $1B in immediate cash, net of fees, which will be paid in the form of a one-time dividend, but it increased shareholder value virtually overnight by more than $600M, which has been sustained.

AOL stock is up almost 82% to date, and has leveled off at about $27 per share, slightly higher than the patent sale share price.

The transaction was instigated by Starboard Value LP, an AOL investor unhappy with the stock performance that at the time of the transaction owned approximately 5.3% of the company’s shares. Starboard Value will realize about $53M from the one-time dividend.

Out of Thin Air

But while the return to Starboard for raising the issue of hidden value in IP may very well concern some dissident shareholders who expected a higher return and a more orderly sale process, the real story is that more than half a billion dollars in market value was created out of ‘thin air’ by unlocking it through an IP rights transaction.

Reviewing the numbers, it has been widely stated in several publications that the AOL stock jumped 42% on the announcement of the patent sale to Microsoft. AOL’s market cap of $2.4B was $1.8B for weeks prior to the deal.

The question investors and fiduciaries should be asking is: Why aren’t other significant IP holders considering similar moves? If so, what are potential opportunities and impediments?

The global corporate landscape is littered with candidates ripe for similar win-win outcomes that can be generated from strategically leveraging patents. Pay close attention over the coming months, now that Wall Street is finally waking up to the financial potential of IP. More scenarios are likely to follow.

Too Many Warheads

Companies with IP rights should be thinking about a patent sale as an opportunity -- especially if not aggressively doing so gives dissident shareholders a reason to point a finger. The downside of patent sales is that a business may be “giving away” potential cross-licensing and future enforcement revenues.

But, in an era where cash is king, it often makes sense to take the money now. If necessary, companies can always find a reasonable and affordable way to deal with cross licensing and assertion needs. Retaining enough of their best IP to be credible is one method. That’s why AOL decided to hold on to 300, or so, of its patents, despite the large cash sale. It is unclear which of the some 18,000 patents and applications that InterDigital has retained, but, rest assured, there is plenty of value in what remains.

Much like downsizing a nation’s nuclear arsenal, a company’s patent capability should be proportionate to its needs. Holding too many important patents may be less necessary than it appears – and more costly to market value.

Fourteen weeks ago, the Steel City Re reputation metrics suggested Nokia's prospects were bleak. Nokia is not getting any better. Reputation vital signs recorded late last week are consistent with a company on life support. Think of those movie scenes where the heart monitor switches from a series of pings to a monotonous tone, and the  display switches from peaks and valleys to a flat line.

All current vital sign metrics are below the 10th percentile. The historic reputational volatility metric is in the 92nd percentile. Diagnosis: recent violent reputational trajectory with evolving terminal failure of life support systems. (Note that the reputational metrics anticipated the market price failure by a few weeks.).

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 ranking metrics. The metrics comprise non-financial indicators of reputational value. 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

And now for something completely different: volatility. Greece whose plight moved markets 20% nearly one year ago has top billing again as voters prepare to opine on the future of Europe as we know it. On the bright side, Bloomberg quotes a market analyst saying, “Most investors think the outcome is likely to be a coin toss.” There you have it -- 50/50 on the fate of Western markets is good news. Res ipsa loquitur. Still, Repustars Variety is outperforming the S&P500 for the calendar year.

Turning to companies who appear to have been undervalued at the start of this calendar year, the greatest gains in the 2012 RepuStars portfolio are being reported by Vertex Pharmaceuticals (VRTX) with a year-to-date climb of 55.71%. American Eagle Outfitters (AEO) is in second place at 39.10% for the year. In third place, Questcor Pharmaceuticals takes the prize returning for the year 33.03%. These are three of the 38 firms identified by the RepuStars Variety algorithm at the start of the year as value opportunities.

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

Weekly Update

At the close of trading June 15, 2012, REPUVART and REPUVAR stood at 2682.65 and 2318.39 respectively. Over the past four weeks, the former has changed by 3.86%, while the latter has changed by 3.68%. The benchmark S&P500 Composite Index stood at 1169.64 (31 Dec 2001=1000) and has changed over the past four weeks by 3.68%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 2.19% and 0.83% respectively; the S&P500 Composite Index has changed by 5.61%. Since January 2009, the REPUVART and REPUVAR have changed by 114.39% and 101.87% respectively; the S&P 500 Composite Index has changed by 44.11%. 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 help demonstrate the 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 Rank™, which tracks 7000 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 and posted by Dow Jones Indexes in the third week. 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 ranking metrics. The metrics comprise non-financial indicators of reputational value. 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

Another week, and another volatility ride. Were equities a form of amusement, the experience would definitely rate an E-ticket: high speed, wild gyrations, etc. Still, Repustars Variety is outperforming the S&P500 for the calendar year.

Turning to companies who appear to have been undervalued at the start of this calendar year, the greatest gains in the 2012 RepuStars portfolio are being reported by Vertex Pharmaceuticals (VRTX) with a year-to-date climb of 56.93%. American Eagle Outfitters (AEO) is in second place at 41.27% for the year. In third place, competition was tight but NetEase (NTES) takes the prize returning for the year 29.89%. These are three of the 38 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 out, the three greatest disappointments this year to date are Federal Mogul Corporation (FDML) at -41.73%, Coeur d’Alene Mines (CDE) at -28.80%, and Walter Energy, Inc. (WLT) at -28.75%.

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

Weekly Update

At the close of trading June 8, 2012, REPUVART and REPUVAR stood at 2689.56 and 2324.67 respectively. Over the past four weeks, the former has changed by -2.51%, while the latter has changed by -2.90%. The benchmark S&P500 Composite Index stood at 1154.68 (31 Dec 2001=1000) and has changed over the past four weeks by -2.05%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by 3.24% and 1.85% respectively; the S&P500 Composite Index has changed by 4.30%. Since January 2009, the REPUVART and REPUVAR have changed by 114.94% and 102.42% respectively; the S&P 500 Composite Index has changed by 42.27%. 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 help demonstrate the 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 Rank™, which tracks 7000 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 and posted by Dow Jones Indexes in the third week. 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).

Huygens noted this past Thursday that Morgan Stanley (MS), according to Bloomberg, was getting the Rodney Dangerfield treatment - no respect. Today, with the benefit of the weekly Steel City Re reputation metrics, we take a closer look.

The time series chart in the top right corner below shows just how miserable the year has been for Morgan Stanley. Over the trailing twelve months, relative to its peers comprising some 260 financial service firms, its reputation rank (in blue) never reached above the 50th percentile. While its current reputation value volatility over the past three months is less than over the past year, the vital signs chart shows that relative to its peers the volatility has crept up from the 66th to the 70th percentile. More worrisome for the firm's stakeholders are that the forward-looking trend indicators (direction of change) are all negative which may explain both the high level of volatility and the most recent steep dive in the company's return on equity relative to peers.



For context, compare Morgan Stanley to one its better known peers, JPMorgan Chase (JPM), that has been in the news recently. Currently also facing a reputational challenge of some significance, JPMorgan Chase's issues are new and follow a period of low volatility (for this sector) ranking in the 16th percentile relative to peers. As a result, although JPM's direction of stability of its reputation rank is more negative than MS, its current reputational volatility is about the same (72nd versus 70th percentile), its reputational rank is still much higher (48th vs 24th percentile), and therefore its return on equity is greater.

Bloomberg reports today (Moore, 7 June) that Morgan Stanley (MS) is having a hard time convincing investors that it is a different company than the one that borrowed more than $100 billion from the Federal Reserve to survive in 2008. "Morgan Stanley has the highest Tier 1 common ratio among the five largest U.S. investment banks, topping JPMorgan Chase & Co. (JPM) (JPM), Bank of America Corp. (BAC) (BAC), Citigroup Inc. (C) (C) and Goldman Sachs Group Inc. (GS) (GS) Still, it faces the largest potential downgrade from Moody’s Investors Service, has the highest-priced credit-default swaps and trades at the biggest discount to liquidation value."

The reputation metrics suggest that Morgan Stanley is having a hard time convincing any of its stakeholders that it has been rehabilitated. The reason its marketing efforts are falling on deaf ears may be due to its historical reputational volatility (See chart below). Good today, bad tomorrow. For firms such as Morgan Stanley, the path to reputation restoration includes a third party attestation.

Moody's is not playing along which is not a good sign if you believe there is value to Moody's opinion. Many banks, at least in Denmark, don't. In this setting, many banks have turned to Warren Buffet for an investment - a very expensive transparent and ringing endorsement. An alternative path for Morgan Stanley might be obtaining reputation insurance. If a third party with expertise and a view on what is going on inside Morgan Stanley -- Warren Buffet or a specialty reputation insurer -- is willing to risk significant capital, maybe investors should, too.

We'll be brief. A company experiences the failure of a key business process and is publicly humiliated. It's reputation is deemed to have been impaired. Experts in reputation metrics asses the situation. The firm's reputation value has dropped to a level that is no lower than the level at which it has resided for at least 32% of the time for the prior two years. Its relative reputation ranking compared its peers dropped as low as the median and is on the rebound only three weeks later. This is not a reputational crisis - not for JPMorgan Chase (JPM), at any rate. (Loss Gates mark the 1.0, 1.5, 2.0, 2.5, and 3 standard deviations of the 2-year historic Reputation Value Metric average.)

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 ranking metrics. The metrics comprise non-financial indicators of reputational value. 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

As the punchline goes, “waking up chained to the radiator thinking, ‘Oh No! Not again.’” It is nearly summer, and time once again for the now apparently annual equity market meltdown. The “fear index,” the CBOE VIX, is up 20% from a week ago. The central thesis to RepuStars, which tries to anticipate both opportunities and pitfalls through an analysis of reputation metrics – rational expectations as reflected in economic behavior – is struggling to manifest in the face of extreme fear.

Still, Repustars Variety is outperforming the S&P500 this year. Turning to companies who appear to have been undervalued at the start of this calendar year, the greatest gains in the 2012 RepuStars portfolio are being reported by Vertex Pharmaceuticals (VRTX) with a year-to-date climb of 64.03%. American Eagle Outfitters (AEO) is in second place at 34.4% for the year. In third place, United Continental (UAL) which is benefitting greatly from lower fuel costs is returning for the year 26.02%. These are three of the 38 firms identified by the RepuStars Variety algorithm at the start of the year as value opportunities.

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

Weekly Update

At the close of trading June 1, 2012, REPUVART and REPUVAR stood at 2582.77 and 2232.76 respectively. Over the past four weeks, the former has changed by -6.36%, while the latter has changed by -6.72%. The benchmark S&P500 Composite Index stood at 1113.20 (31 Dec 2001=1000) and has changed over the past four weeks by -6.65%.

Over the trailing twelve months, REPUVART and REPUVAR have, respectively, changed by -4.35% and -5.63% respectively; the S&P500 Composite Index has changed by -1.70%. Since January 2009, the REPUVART and REPUVAR have changed by 106.40% and 94.41% respectively; the S&P 500 Composite Index has changed by 37.16%. 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 help demonstrate the 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 Rank™, which tracks 7000 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 and posted by Dow Jones Indexes in the third week. 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).