The Cyon Research Stock Index

The Cyon Research Stock Index has eight market sectors, shown with their respective percentages of the index:

   • 25% AEC Software
   • 35% MECH Software (see breakdown below)
   •  8% Channel and Services
   •  8% GIS and Geospatial Software
   •  8% Plant Software
   • 10% ECAD Software + Semiconductors
   •  3% Hardware
   •  3% Other Software  

Most of the value of the index is in industry sectors that Cyon Research covers: AEC, mechanical/manufacturing, GIS, Plant, ECAD+SEMI, and the Channel. A small portion of the index is divided among other areas that allow us a direct compare: Hardware and Other Software companies.

With a tracking index for each of these submarkets, we are able to get a finely-tuned picture of what is happening.

The mechanical/manufacturing market consists of very diverse segments that may obscure important trends if we were to aggregate them without further detail. We’ve therefore broken the MECH section into segments to make sense of the movements within the industry. We should thus be able to differentiate between problems within a specific segment and issues that affect the entire industry. The breakdowns are:

   • 40% CAD – computer-aided design
   • 20% CAE – computer-aided engineering analysis
   • 10% CAM / visualization/mockup
   • 20% cPDM – collaborative product data management
   • 10% RP: Rapid prototyping and desktop manufacturing

The stocks for each market and segment are listed in the chart below. Along with the company are the stock symbol and market, weight (more on this later), current price, and holdings.

2017 Portfolio

Note: The table below shows the index at the beginning of the 2017 period (Dec 26, 2016 through Dec 24, 2017). The number of shares and share prices listed do not reflect any stock splits during the period.

Name Symbol Exchange Weight Shares Price on 12/24/15 in local currency
Autodesk ADSK NASDAQ 13 4,787 $76.00
Dassault Systemes DSY.PA Paris 1 373                                                          71.69 
Hexagon AB HEXA-B.ST Stockholm 6 4,750 325.2 kr
Nemetschek NEM.DE XETRA 6 3,152                                                          50.90 
Oracle Corporation ORCL NASDAQ 4 2,873 $38.96
Sage Group PLC SGE.L London 1 3,476  655.5p
Trimble Navigation TRMB NASDAQ 6 5,520 $30.42
Bentley (CASH RESERVE) 9 251,880 $1.00
Autodesk ADSK NASDAQ 8 2,432 $76.00
Dassault Systemes DSY.PA Paris 12 2,956                                                          71.69 
Parametric Tech PTC NASDAQ 7 2,775 $46.62
Siemens SIE.DE XETRA 10 1,535                                                          115.00 
Ansys ANSS NASDAQ 15 882 $92.80
Autodesk ADSK NASDAQ 75 503 $76.00
Dassault Systemes DSY.PA Paris 10 727                                                         71.69 
ESI Group ESI.PA Paris 5 575                                                          45.30 
MTS Systems Corporation MTSC NASDAQ 1 96 $56.40
Siemens SIE.DE XETRA 12 544                                                          115.00 
Altair (CASH RESERVE) 8 43,693 $1.00
MSC (CASH RESERVE) 8 43,693 $1.00
Autodesk ADSK NASDAQ 7 448 $76.00
3D Systems DDD NYSE 3 1,029 $14.20
Dassault Systemes DSY.PA Paris 10 649                                                          71.69 
ESI Group ESI.PA Paris 2 205                                                          45.30 
Parametric Technology PTC NASDAQ 3 313 $46.62
Siemens SIE.DE XETRA 12 485                                                         115.00 
Dassault Systemes DSY.PA Paris 8 1,098                                                          71.69 
Oracle Corporation ORCL NASDAQ 5 1,321 $38.96
PTC PTC NASDAQ 8 1,767 $46.62
SAP SAP NYSE 2 240 $85.71
Siemens SIE.DE XETRA 12 1,026                                                          115.00 
Autodesk ADSK NASDAQ 6 508 $76.00
3D Systems Corporation DDD NYSE 10 4,533 $14.20
Stratasys, Inc. SSYS NASDAQ 12 4,317 $17.89
Accenture ACN NYSE 4 269 $117.79
HP HPQ NYSE 3 1,569 $15.14
IBM IBM NYSE 10 474 $167.06
Infosys INFY NASDAQ 4 2,141 $14.80
Mensch und Maschine MUM.F Xetra 8 4,844                                                            12.50 
Oracle Corporation ORCL NASDAQ 5 1,016 $38.96
RAND Worldwide RWWI OTC BB 8 27,556 $2.30
Tata Consultancy TCS.NS NSE 4 933 Rs. 2,293.10
TechData TECD NASDAQ 2 183 $86.44
Wipro WIT NYSE 4 3,325 $9.53
Autodesk ADSK NASDAQ 10 1,084 $76.0
General Electric GE NYSE 1 258 $31.82
Google GOOG NASDAQ 7 7. $789.91
Hexagon AB HEXA-B.ST Stockholm 10 2,330 325.20 kr
Nokia NOK NYSE 1 1,745 $4.72
Trimble Navigation TRMB NASDAQ 10 2,708 $30.42
ESRI (CASH RESERVE) 10 82,392 $1.00
Paradign Ltd (CASH RESERVE) 1 8,239 $1.00
Autodesk ADSK NASDAQ 8 647 $76.00
Aveva AVV.L London 12 3,299  1,821.0p
Aspen Technology AZPN NASDAQ 10 1,133 $54.24
Dassault Systemes DSY.PA Paris 6 491                                                          71.69 
Hexagon AB HEXA-B.ST Stockholm 12 2,087 325.20 kr
Schneider Electric SU.PA NASDAQ 1 90                                                          65.22 
Parametric Technology PTC NASDAQ 1 131 $46.62
Siemens SIE.DE XETRA 9 459                                                          115.00 
Bentley (CASH RESERVE) 8 49,188 $1.00
Advance Micro Devices AMD NYSE 3 2,052 $11.58
Ansys ANSS NASDAQ 6 512 $92.80
Cadence Design CDNS NASDAQ 10 3,075 $25.76
Cisco CSCO NASDAQ 3 778 $30.53
Imagination Technologies IMG.L London 3 7,709  251.0p
Intel INTC NASDAQ 3 642 $36.97
MEMSCAP MEMS.PA Paris 1 4,532                                                            1.67 
Nvidia NVDA NASDAQ 3 216 $109.78
PDF Solutions PDFS NASDAQ 3 1,030 $23.07
Qualcom QCOM NASDAQ 3 355 $66.864
Siemens SIE.DE XETRA 9 459 115.00 €
SoftBank TSE:9844 Tokyo 3 356 ¥7,837
Synopsys SNPS NASDAQ 14 1,855 $59.76
Xilinx XLNX NASDAQ 1 130 $60.56
Apple AAPL NASDAQ 12 338 $115.52
Canon Inc. CAJ NYSE 2 225 $29.14
FARO Technologies, Inc. FARO NASDAQ 5 225 $36.50
Fujitsu Limited FJTSY Other OTC 1 450 $28.01
Hewlett-Packard HPQ NYSE 12 2,605 $15.14
Hitachi HTHIY Other OTC 1 60 $54.67
Immersion Corp IMMR NASDAQ 1 296 $11.08
Lenovo Group LNVGY Other OTC Issues 8 2,219 $11.85
Logitec International, SA LOGI NASDAQ 2 271 $24.22
Ricoh RICOY OTC BB 1 382 $8.60
Silicon Graphics SGI NASDAQ 1 424 $7.75
Xerox XRX NYSE 1 364 $9.01
Adobe ADBE NASDAQ 6 232 $105.02
Computer Associates CA NASDAQ 2 253 $32.05 CRM NYSE 6 348 $69.90
Microsoft MSFT NASDAQ 12 771 $63.24
Orbotech Ltd Ord ORBK NASDAQ 1 121 $33.49
QAD QADB NASDAQ 1 159 $25.50
Red Hat RHT NYSE 2 118 $68.71
Software AG SOW Xetra 6 686 33.97 €
Symantec SYMC NASDAQ 2 336 $24.14

Cyon Research takes no responsibility for the accuracy or appropriateness of the Cyon Research Index. The index is put forth as a tool for analyzing the engineering software industry. We are not investment counselors. Our comments are not regulated by any government agency and we make no claims as to the predictive value of our comments. Anyone using the index as the basis of an investment strategy is a wholly unadvised risk and responsible for his/her own losses.

The Cyon Research Index Data and other Cyon Research intellectual property you access via the website may not be used as a basis for any financial instruments or products (including, without limitation, passively managed funds and index-linked derivative securities), or used to verify or correct data in any other compilation of data or index, or used to create any other data or index (custom or otherwise), without Cyon Research’s prior written permission.

How It Works

The stocks for each market and segment are listed in the chart below. Along with the company are the stock symbol and market, weight (more on this later), current price, and holdings.

To create the index, Cyon Research invested a fictitious $1,000,000, allocated among the markets according to the values listed above. The Cyon Research Stock Index is set to the current value of all the holdings, divided by 10,000—a value of 100 at our start date of December 24, 2000.

Within each market, a weighting system is imposed, and investments are made based on those weights. Any virtual monies not invested are left in the fund as cash. For the purpose of the index, the cash does not accrue interest, nor are there any transaction fees imposed when buying or selling fictitious shares. 

Each stock within each market (and segment) is weighted to reflect the impact that company has on the market (or segment). At the end of each year, We re-examine the market and change the weights accordingly. The weights are highly subjective in nature and reflect the opinion of Cyon Research, the final arbiter of the weights. (The weights are totaled, and each stock is assigned a dollar value based on its percentage of the total weights for that market or segment.)

At the end of each year (on the last trading day before December 25th) the Index is re-evaluated. All stocks are “sold.” The total dollar amount is redistributed to each market and segment with the same proportions as the fund started with: 25% AEC, 40% MECH, and so on. The weights for each stock will be reappraised; the stocks will be “repurchased” based on the revised allocations. Going through this process each year will prevent the index from getting out of synch with its purpose.

From time to time, certain conditions may arise that call for mid-year corrections to the index.

1. Stocks that belong in the index may enter the market. To accommodate them, all stocks in that market or section will be “sold,” the new stock will be given an appropriate weight, and all the stocks in that section will then be “repurchased” based on the revised allocations. Weights for stocks then in the index will NOT be revised—that only happens at the year-end review.

2. Companies whose stocks are in the index may be target of mergers and acquisitions. In the case of a merger or acquisition by a public company, the stock will be replaced by the same dollar value of stock of the merged or acquiring company. If a stock is acquired by or merges with a private company, the value of the stock shall be added to the cash-on-hand for that sector.

3. Any dividends generated by the stocks held are ignored, except for exceptional events, in which case the value is added to the cash on hand for that sector.

4. The Cyon Research Stock Index is based on the US dollar. At each update, native currency values are converted into the equivalent US dollar amount at the the reported exchange rate at noon on that day. The exchange rates may cause fluctuations in price of non-US stocks, with attendant impact on the index.

5. Certian private companies play a major role in their sectors. For these companies we have set aside a dollar amount (determined by the company's weight in that sector) as a reserve. Should one of these companies go public or be aquired by a public company, shares will be allocated as the reserve amount allows.

The current Cyon Research Index was set on December 24, 2000 with an imaginary investment of $1,000,000 distributed in the eight market sectors. An initial index value of 100 was established by dividing the value of the investment by $10,000.  By comparison, the NASDAQ on that same date was 2517.02.  At the end of its seventh year, the Cyon Research Index reached 236 representing $2,360,749.58.  That’s not bad, particularly when you consider that the NASDAQ ended the same period at 2670.09, an index of 106.

In addition to adjusting the sectors, every year at this time we perform our annual market adjustment.  The adjustment is necessary to allow the index to follow its original purpose – tracking our industry.  Each sector experiences different growth rates (otherwise, we’d have no reason to track it), and after a period of time, the index becomes unbalanced; we end up with too much invested in one sector versus another.  This imbalance lessens the value of the index for understanding the movements within the industry.

A second level of imbalance occurs after a single stock experiences significant change in value relative to other stocks in the index.

To counter this, we periodically adjust and rebalance the index.  We do this by figuratively selling all holdings in the index and redistributing the resulting funds to each sector in their original percentages.  The funds within each sector are then redistributed among the stocks within the sector with the values weighted according to our view of the importance they hold to each market.  Some stocks are represented in multiple sectors.  For example, Autodesk is the predominant player in the AEC sector and also plays a significant but smaller role in the CAD software division of the MECH sector.

We also take this opportunity to make other adjustments, such as moving a stock that might be better placed in a different sector, deleting stocks that are no longer relevant (or that have been delisted), and adding new stocks to the index that might have been overlooked in the past or that are new to the market.  Each year, we add a designation, indicating funds that we have set aside for companies that we expect to go public within the next year.  We will convert that set-aside amount into shares of the stock 30 days after the stock is listed.  The delay is intended to allow the stock price to settle in order to get a better picture of the market value of the stock.  All of these adjustments are indicated in the table and detailed below.        

Recent M&A Activity

Solera (SLH) was taken private by Vista Equity partners, for $55.85/share in a deal valued at $6.5B. The transaction was completed on March 3, 2016.
Geometric (GEOMITRIC.NS) was acquired by HCL Technologies on April 1, 2016 for $192M in a stock swap
ARM (ARM) was acquired by SoftBank (TSE:9844) on September 6, 2016 for $32B
EMC Corporation (EMC) was acquired by Dell on September 7, 2017 in a transaction valued at $67Bwith the transaction valued at $24.05/share
Mentor Graphics (MENT) was acquired by Siemens (SIE.DE) for $37.73/share in a transaction valued at $4.5B, in a transaction to close Q2 '17
TIBCO (TIBX) was taken private at the end of 2014 (SU.PA) with the transaction valued at $24/share, or about $4.3B
Invensys (ISS.L) was acquired by Schneider Electric (SU.PA) with the transaction completed on 1/17/2014 in a cash and stock deal valued at 502 pence/share, or about $5B
Cimatron (CIMT) was acquired by 3D Systems Corporation (DDD), with the transaction completed on 2/8/13, for $8.97/share, or about $97M. The deal is scheduled to close Q1'2015. $100M cash.
MIPS Technologies (MIPS) was acquired by Imagination Technologies Group plc (IMG.L), with the transaction completed on 2/8/13, for $100M cash.
Dell (DELL) was taken private by its founder, Michael Dell, and Silver Lake Partners. Total consideration was $13.88/share in case, or approximately $24.9B. The transaction closed on with the transaction completed on 10/98/13
DELCAM (DLC.L) has agreed in principle to be acquired by Autodesk (ADSK) for £20.75 per share, or approximately £172.5M. The transaction is expected to close in Autodesk's Q1, 2015. Autodesk will use non-US-based cash for the transaction.
Magma (LAVA) was acquired by Synopsys (SNPS) for $7.35/share in a cash transaction of about $523M, on 2/22/12
Thoma Bravo, LLC took Deltek (PROJ) private on 10/10/12 for $13/share, or about $1.1B
Eastman Kodak (was EK, now PINK:EKDKQ) filed for voluntary Chapter 11 reorganization on 1/19/12
Ariba (ARBA) was acquired by SAP (SAP) on 10/1/12 for $45/share, or about $4.3B
Trimble Navigation (TRMB) acquired Google's (GOOG) SketchUp for an undisclosed amount in April, 2012
Vector took Gerber Scientific private at $11.00/share, or about $283M on 8/18/11
Infor acquired Lawson at $11.25/share, or about $2B, on 7/18/11
Tekla was acquired by Trimble on 7/13/11 for EUR 14.20/Share, or about $442M
Avatech (AVSO) acquired Rand Worldwide on 8/17/10 in a reverse merger and now operates as Rand Worldwide (OTC:RWWI)
OCE NV (DE:OCE) was acquired by Canon in 2010
Sun Microsystems (JAVA) was acquired by Oracle in 2010
MSC.Software (MSCS)MSC.Software was acquired by Sympony Technology Group (privately held) on 10/16/09 for $8.40/share, or about $340M
Electroglas, Inc. (EGLS)announced voluntary Chapter 11 Petition Filing on 7/10/09 with intent to sell the company

Navteq (NAV) was acquired by NOKIA (NOK) on 7/10/2008 for $8.1B in cash at $78.00/share

Flomerics (FLO) was acquired by Mentor Graphics (MENT) on 10/9/08 for about $60 M. Mentor had owned about 29% of the company
EDS (EDS) was acquired by Hewlett Packard (HPQ) on 8/26/08 for $13.9 B at $25/share
Ansoft (ANST) was acquired by Ansys (ANSS) on 7/31/2008 for $832M at $16.25/share plus 0.431882 shares of ANSYS/share















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