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At Easton, we have favored the information industry as a place for companies to find attractive strategies and the potential to generate superior shareholder results. A portfolio of information companies developed in 2003 has yielded a modestly superior shareholder result to the broader market indicies like the Dow, S&P 500 or NASDAQ. But as stressed in other places on our website, that has not been the point of the index. Much more important is that shareholder value for superior firms within the index far outdistanced the field as a whole. This, we believe, is because of the advantageous structure of many but not all information business models.

Because the index and the ratings were frozen in 2003, it was not meant to guide investment decisions. Clearly, the fortunes of firms will rise and fall depending on many factors, and strategies have to be reexamined regularly. The original Easton Information Index had 78 firms. Five years later, mergers, acquisitions and privatization had reduced the list by 30% with several acquisitions pending. In addition, digitization and globalization continued to change/expand the competitive landscape.

Easton decided to retire the first portfolio and created a refreshed portfolio of 86 firms; many are ‘new media’ and/or based outside the USA reflecting the impact of digitization and globalization. Recent performance shows a similar pattern to past results. We will now “freeze” the names in the updated index for next five years.

Easton Consultants, Inc.
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