Silicon Fen Top 20, the Cambridge Cluster's own share price index, launched; will measure the collective bottom line
Today, we launch the Silicon Fen Top 20 Share Price Index to serve as a gauge of the collective performance of Cambridge's world-renowned cluster of high-tech companies.
The Index measures the share price movements of the Top 20 companies in the region around Cambridge known as Silicon Fen as measured by market capitalization. (It appears on the left side of the web site, and is regularly updated during the day).
Because the companies have headquarters are in Silicon Fen, the index is an approximation of the collective shape of the Cambridge Cluster's profitability and performance - its bottom line - as a company's share price usually reflects its performance and potential.
Companies in the Top 20 include the Cluster giants ARM Holdings and CSR, both now capitalized at well over a billion pounds; ahead of buoyant Autonomy which is hovering around £850m and a group in the middle ranks headed by Cambridge Antibody and Alizyme. There are several smaller companies, with Bango squeezing into 20th place with a market capitalization of around the £50m mark.
The total value of the Silicon Feb Top 20 companies is over £6.2bn.
Given the volatility of high tech stocks in general and smaller capitalization companies, we expect to see our Top 20 Index wobble about from time to time.
There are at least two major approaches to structuring an index of share prices. The two most widely known, the FTSE 100, administered by the Financial Times, and the Dow Jones Industrial Index, administered by The Wall Street Journal (WSJ), adopt different approaches.
The FTSE 100 measures changes in market capitalisation of the Top 100 companies (as measured by market capitalization, not sales or profit), most of which would be described as 'blue chips'. To avoid confusion of which companies constitute the top 100 on any single day, the constituents are fixed each quarter. It is a clear, transparent index.
The Dow Jones Industrial Index by contrast is a group of 30 top US companies that the editors of WSJ believe are representative of American industry. They weight the index in favour of the higher price stocks, such as Microsoft. They change it from time to time, though usually years go by without modification, based on whether they believe the selection still represents the structure of US industry.
We've chosen the FTSE 100 route, and will review, and if necessary amend, the list every quarter.
Of course, it does mean that many top quality firms are excluded because they are either too small or have chosen not to list their shares on a stock market. Also excluded are the local arms of the big multinationals like Toshiba, Microsoft and GlaxoSmithKline. These branches are critical to the overall health of the region's economy but we could not convince ourselves that their share price was routinely impacted by what they were doing in Cambridge, no matter how innovative.
The companies in the inaugural Silicon Fen Top 20 Share Price Index are:
Abcam; Acambis; Alizyme; Amino Technologies; ARM Holdings; Autonomy, Aveva; Bango; Cambridge Antibody; Cambridge Display Technology; CSR; CMR Fuel Cells; Dialight, Domino Printing; Intercytex; nCipher; NXT; Plasmon; TTP Communications; and, Xaar.
The base period for the index was set at 5.15pm GMT on 1st February, 2006.
There will have to be changes in the make up of the index on 1 May, its scheduled review date. nCipher is likely to be removed if the takeover by SafeNet Inc is successful, as seems likely at this stage.
In addition,
