NEW YORK--(EON: Enhanced Online News)--For the tenth year in a row, the top-ranked companies in the 2015 Rittenhouse Candor Analytics Survey™ beat the S&P 500, with a total average return of 17.6 percent compared to the S&P 500 return of 1.8 percent over the survey period from Q2 2015 to Q2 2016.
“The communications in these companies’ shareholder letters excelled in accountability, stewardship, vision, leadership and trustworthiness.”
Candor Analytics™ is a measurement tool created by Rittenhouse Rankings to systematically evaluate executive communications and rank companies based on high to low candor scores. This measurement system sorts executive communications into categories that reveal the strength of tangible and intangible performance drivers.
Over the past 10, five and three years, the average compound annual returns of the 25 top-ranked companies over the Candor Survey period were 18.1 percent, 28.3 percent, and 30.7 percent compared to the S&P 500’s compound returns of 7.1 percent, 11.5 percent and 10.7 percent, respectively.
Top-ranked companies in the 2015 Candor Survey with the best market current performance, year-over-year, are: AMD (+353 percent), Hewlett Packard Enterprise (+68 percent), Texas Instruments (+28 percent), Charles Schwab (+23 percent) and Amazon and Honeywell (each +19 percent). CEO L.J. Rittenhouse said, “The communications in these companies’ shareholder letters excelled in accountability, stewardship, vision, leadership and trustworthiness.”
Bottom-ranked companies which fell the most in current value, year-over-year, were: Lenovo (-41 percent), Fiat (-36 percent), Novartis (-17 percent) and Bristol-Myers (-16 percent). “The letters from these companies,” noted Rittenhouse, “were less focused and informative.”
The Rittenhouse Candor Analytics™ Survey is one of several tools in an emerging field of investment analysis called “Financial Linguistics". This work focuses on analyzing words and numbers to identify the drivers of shareholder value. It combines insights from behavioral economics with the principles of financial accounting and valuation.
Rittenhouse Rankings’ representative Survey sample of 100 Fortune 500 companies is based on industry, market capitalization and reputation criteria. Candor is systematically quantified by awarding points for informative disclosure and deducting points for jargon, confusing statements and clichés.
Rittenhouse Rankings consults and works with executive teams to boost results by creating value-adding communication strategies and campaigns based on proprietary Candor Analytics. Rittenhouse’s book, Investing Between the Lines: How to Make Smarter Decisions by Decoding CEO Communications was endorsed by Warren Buffett.