{"id":806,"date":"2013-05-19T12:25:55","date_gmt":"2013-05-19T16:25:55","guid":{"rendered":"http:\/\/www.trustacrossamerica.com\/blog\/?p=806"},"modified":"2013-05-19T12:25:55","modified_gmt":"2013-05-19T16:25:55","slug":"trustworthy-business-and-stock-market-outperformance","status":"publish","type":"post","link":"https:\/\/www.trustacrossamerica.com\/blog\/?p=806","title":{"rendered":"Trustworthy Business and Stock Market Outperformance"},"content":{"rendered":"

Does Trustworthy Business Result in Stock Market Outperformance?<\/p>\n

This week, a well-respected colleague put a challenge before me. He said that Trust Across America (TAA) must continue to correlate stock market performance to trustworthiness in order to gain the attention of public companies. In other words, companies care about little else.<\/p>\n

While I humbly think that TAA has gained plenty of attention, I love a challenge! So Mike, this one\u2019s for you!<\/p>\n

I decided to look back at our first \u201cTop Ten\u201d Most Trustworthy Public Companies named in early 2010 and calculate the collective market performance of these ten companies vs. the S&P 500.\u00a0 We begin our calculation on December 10, 2009, the day the companies were selected, and end on May 17, 2013.<\/p>\n

This is the list:<\/p>\n

Hess (HES)<\/p>\n

Albemarle (ALB)<\/p>\n

Best Buy (BBY)<\/p>\n

Cummins (CMI)<\/p>\n

Eastman Chemical (EMN)<\/p>\n

Lexmark (LXK)<\/p>\n

Lubrizol (acquired by Warren Buffett)<\/p>\n

Sonoco Products\u00a0 (SON)<\/p>\n

Texas Instruments (TXN)<\/p>\n

USANA (USNA)<\/p>\n

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Setting Lubrizol aside (although the Buffett acquisition could be the subject of a separate blog post) leaves us with 9 companies. Collectively, these companies posted gains of 63.96% vs. 51.27% for the S&P, resulting in outperformance of 24%. For those of you who want to dig a bit deeper, 8 companies increased their share price while one (Best Buy) saw a decrease. Three companies had greater than 100% stock price appreciation over that period.<\/p>\n

So Mike, in the short-term you may be more right than wrong. But the world is not that simple. We are seeing a shift in focus away from shareholder value, albeit a slow one. Building trustworthy organizations and increasing stakeholder trust, while flying in the face of the quarterly income statement mentality, may be gaining in popularity.<\/p>\n

I will argue that the companies listed above are \u201con to something\u201d that somehow approximates trustworthy business practices.\u00a0 On the other hand, maybe Trust Across America just got lucky, as I\u2019m sure some will conclude, when our FACTS\u00ae Framework<\/a> chose these companies back in 2010.\u00a0 You decide.<\/p>\n

Feel free to leave your comments here or email me at barbara@trustacrossamerica.com<\/a><\/p>\n

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Our book, Trust Inc:, Strategies for Building Your Company’s Most Valuable Asset<\/a>\u00a0<\/em><\/strong>is now available for preorder!<\/p>\n

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Trust Inc.<\/p><\/div>\n

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